State of Georgia: the Flexible Benefits Program 1998-99

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Ifyou have a disability and need this material in an alternative format, please notify the Merit System in advance ofyour need:
404-651-6071, or 1-800-255-0056 TDD Relay Services.

efits

ne Numbers

Call

Call

if you have a question about if you have a question about

how the plan works... a claim that has been submitted...

State Health Benefit Plan (Standard & High Options)

Claims or Benefits Atlanta metropolitan area Outside metro area

404-233 -4479 1-800-483-6983

404-23 3-4479 1-800-483-6983

Eligibility Atlanta metropolitan area Outside metro area
Medical Certification Program (MCP)

404-656-6322 1-800 610 1863

Not applicable Not

Atlanta metropolitan area

770-438-9770

404-233-4479

Outside metro ar-ea--:-----::==:----1--8-00--7-6-2--45-3-5 --------_1-8.0_0-4-83--6-9-83--_._--
Behavioral Health Services (BHS)

Atlanta metropolitan area Outside metro area NurseCall 24

1-800-631-9943 1-800-631-9943 1 800-5247130

404-233-4479 1-800-483-6983
Not

HMOs BlueChoice Healthcare Plan

1-800-464-1367

1-800-464-1367

Kaiser Permanente Prudential

404-261-2590 1-800-738-1728

404-261-2825 1-800-738-1728

Aetna U.S. Healthcare

1-800-444-0759

1-800-444-0759

.. .. .... -------------------~-----------_._--~ ~.---------_.:._----.-._~.-.-:----~:

AD&DlDependent LifelLife Insurance

404-656-2730

1-888-S0G-FLEX

Life conversion and portability information Deferred Compensation Program

1-888-S0G-FLEX or 1-888-764-3539

or 1-888-764-3539

Before 7/1/98

1-800-746-3682

1-800-746-3682

After 7/1/98 (Great West "Key'-Ta-lk-")-_..:......._1-8-0-0--70-1--8-2-55-------- 1-800-701-8255

_ -D-en't-a...l.. I-nsu-ran-ce......_--------~ _ ......... - - -1--80-0--45-1-2-5-13- - - - - - - -1--80:0--45-1--25-13

Dental PPO (Call for dire~)

1-800-451-2513

1-800~451-2513

Disability Insurance

404-656-2730

1-888-S0G-FLEX

Legal Insurance Hearing Impaired
~-Term Care Insuran~e _ Spending Accounts

1-800-848-2012 1-800-952-0450 1-800-227-4165
404-656-2730

or 1-888-764-3539 1-800-367-7526
1-800-227-4165 404-656-2730

General questions about the Flexible Benefits Program? Call 404-651-6071

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Benefits PrograIll for 1998-99

As usual there are rate changes in various benefit choices this year. Your cost for some benefits will go up, while your cost for other benefits may decrease or stay the same. -Short-term disability rates will decrease. -Long-term disability rates will increase due to a new $100 minimum monthly benefit, a higher monthly benefit maximum of $4,000 and improved service. See page 27. -Dental insurance rates will increase due to higher coverage for preventive care and a new lifetime maximum of $1,500 for dependent orthodontia benefits. See page 36.
HMO availability is being expanded to Lumpkin, Dawson and Lincoln counties, in addition to where HMO coverage is now available. Of course, the Standard and High Options continue to be able to all State employees.

There will be a new disability insurance plan carrier and a simpler medical underwriting process.
A new 401 (k) Plan will be available to all employees in permanent, full-time positions as well as part-time or temporary employees working 1,000 hours or more per year. This is in addition to the current Deferred Compensation Plan that will continue to be available. See pages 50-58.
not wish to make any changes in sign your Option Statement choices will
CQ!tHmtlf in 1998-99. (Your cost

The State Health Benefit Plan High Option hospital deductible will be charged per admission instead of per year. Your reimbursement for hospital coverage will be 80% in the Standard Option and 90% in the High Option. Your professional and facility coinsurance cost for approved transplant benefits will increase by 10% when a non-network center is used for both the Standard and High Options. See page 34.

---------------.----------------

rrableof Contents

Dental Insurance

36

Lat(~(,Htl;l11t limitations

36

Dent~ll in~Hl~lli{;e and PPO options

(:O!lxllarison chart

,

37

Introduction

4

Some imp'Jrul1t features of tbe dental options

.38

Flexible Benefits Program Calendar

5

Exclusions list

.38

Benefit Salary

6

Example of dental expense benefit payment..

.39

Getting advice about your benefits

6

Spending Accounts

40

Who's eligible to participate

6

Healtb expenses allowed by tbe IRS

40

You decide tben sign up for benefits

6

Healtb care spending account..

41

Exclusions list

41

Enrollment Section

7

How it works

42

What's Ahead in your benefits future

7

Your coverage

42

What's Ahead- Single witb no Children

8

Child (dependent) care spending account..

43

What's Ahead- Single witb Children

.10

How it works

43

What's Ahead- Married witb no Children

12

The dependent care tax credit versus tbe child

What's Ahead- Married witb Children

14

(dependent) care spending account..

44

Additional Considerations

16

When your spouse has benefit coverage

.16

When you are a new employee

16

When your spouse works for tbe State

17

Medical Underwriting Requirements

and Forms To Complete

.18

Forms to complete for life insurance

18

Forms to complete for AD&D insurance

20

Forms to complete for short-term disability insurance 20

Forms to complete for long-term disability insurance 20

Forms to complete for long-term care insurance

20

Forms to complete for healtb benefits

21

Forms to complete for tbe

Deferred Compensation Program

21

After You Enroll

22

When coverage begins

22

Confirming your choices

22

To change your decisions

22

Important note

22

Child (dependent) care spending account limits

44

Exclusions list

44

Child (dependent) care: tax credit or pre-tax

spending account?

45

Spending account "calendar"

.46

New employees

46

Employees returning from a leave of absence

.46

Important information for

terminated!retired employees

47

Important information about healtb care and child

(dependent) care spending accounts

47

A word about forfeitures

.47

Long-Term Care Insurance

.48

When are benefits paid

48

Who can be covered

.48

Your long-term care options

49

Your premiums

49

Long-term care facts

49

In tbe future

49

Deferred Compensation Program

50

Information Resource Section

23

Life and AD&D Insurance

24

Life insurance for you

24

Dependent life insurance

25

Accidental deatb and dismemberment insurance

25

Disability Insurance

26

"Pre-existing conditions"

26

Short-term disability protection

26

Long-term disability protection

27

If you are eligible for early retirement

due to disability

28

Legal Insurance

.29

How legal insurance works

.30

Common legal expenses covered by legal insurance 30

N oncovered legal services

.31

Exclusions list

.31

Healtb Benefit Options

32

The Standard and High Options

.32

Healtb Maintenance Organizations

.3 3

An overview of tbe changes

50

What is a deferred compensation plan?

51

How do tbe two plans compare?

51

Enrolling in a deferred compensation plan

54

Choosing a deferred compensation plan

54

Choosing investment options (deferral allocations) 54

Now-two approaches to managing investment

of plan contributions

54

Required re-allocations for current deferrals

57

Required re-allocations for previously invested

account balances

57

Making otber changes to your plan

57

Enhanced participant services

58

Additional Information

59

Pre-tax premiums help you stretch your dollars

59

A few words about pre-tax premiums

60

If you leave State employment..

61

Taking coverage witb you when you leave

61

Otber information about your benefits

62

.. Use your plan wisely-save $$$

.33

NEW! Benefit changes provide cost!

premium control

.34

Comparing healtb insurance

.3 5

----------------

Index

63

----------------

Howuo"Use uhisCBooklet

The You DecMt'!bLloklet iii Jiyidcdiuto tll.rec
main sections.
INTRODUCTION SECTION pages 4-6
This section introduces the 1998-99 Flexible Benefits Program theme. It also includes suggestions for enrolling in your Flexible Benefits selections. This section includes a calendar of key dates for the Flexible Benefits Program.

ENROLLMENT SECTION pages 7-22
Use this section with your Option Statement to make your benefit decisions for 1998-99.
For several benefit options, you will need to complete a Medical Underwriting process and be approved by the appropriate insurance company before you have coverage.
This section also includes enrollment ti ees who are married to another State, who have benefit coverage availabl~:~ employer.

INFORMATION RESOURCE

pages 23-62

~

Use this section for more detailed inDo

the Flexible Benefits Program and

mation about each of the benefit pIa

The Tax Tips in each section can how your benefit selection will a

-------------------,C-----------

Introd1.lctio.tl

BENEFITS FOR THE FUTURE-
LOOKING TOWARD THE MILLENNIUM
Another year has sped by and we are moving down the road again toward the Flexible Benefits Program 1998-1999 Open Enrollment. Feel as if you are fast-forwarding into the future? Want to press the "pause" button for a moment and consider that future before it gets here? Given the current pace of change, it would take an active imagination to visualize what your whole world will look like. But you can do something easier and more practical. You can spend some time now to shape what your future benefits will be like.
As participants in the State of Georgia Flexible Benefits Program, you will notice that, as in past years, some details of the Flexible Benefits Program have changed. It is important each year to understand those areas of change and to make good use of your benefit choices. The details may be different, but the underlying principle stays the sameto keep you and your family on the road to benefits that protect and enhance your future. Some of these benefits may be short-term, lasting only one year; others, like participation in the financial programs available, can have a much longer-term effect on your journey.

Remember, the road ahead will change us as individuals, families, and members of the business community. And we expect that rate of change to accelerate as we approach the millennium and to continue to be a recurrent theme in the Flexible Benefits Program in the years ahead.

---------------.-1----------------

FLEXIBLE BENEFITS PROGRAM CALENDAR

April 1, 1998

Benefit Calculation Date for Open Enrollment. All pay-related
benefits (life insurance, AD&D, and disability) are based on your Benefit Salary and Benefit Age on this date.

April 16-May 15, 1998 Open Enrollment period. During this period, you will receive your
enrollment and benefit materials and attend training meetings and benefit fairs.

May _ , 1998 Your agency's deadline (write in the date) for submitting your Option
Statement and all required forms.

April 17-June 12, 1998

Confirmation Statements prepared. Once your enrollment materials
have been processed, a Confirmation Statement will be prepared and sent to you. Examine your Statement carefully to be sure your choices have been recorded correctly. The Confirmation Statement will show the amount that will be taken from your paycheck beginning in June. Contact your personnel/payroll office immediately if you discover an error in processing.

June 15, 1998 Your first payroll reductions for the new plan yearfor your health bene-
fit plan premiums and one-half of your monthly spending account contributions.

June 30, 1998

Your first payroll reductions for the new plan year for premiums for
all other Flexible Benefit options and the remaining one-half of your monthly spending account contributions.

July 1, 1998 Coverage effective date (provided you are not absent from work on the
first scheduled workday in July due to illness or disability).

July 15, 1998 Notify your personneVpayroll office if you have not received your
SHBP ID card or Notice of HMO Membership Action form by this date.

May 1999 Last salary reductions for health benefit plan premiums, spending
account contributions, and for all other Flexible Benefit premiums for 1998-99.

June 30, 1999 Last day of coverage for the 1998-99 plan year. Last day to incur
eligible expenses to be reimbursed from the spending accounts for the plan year.

September 30, 1999

Deadline for filing spending account claims for expenses incurred
during the 1998-99 plan year Guly 1, 1998-June 30, 1999). Claims must be postmarked by this date.

----------------~~-----------------

BENEFIT SALARY
Benefit Salary is the pay used to calculate your paybased coverage (life, AD&D, and disability coverage). Your Benefit Salary includes your base salary and salary supplements that are regular, non-temporary, and do not exceed the amount on which retirement contributions are calculated.
GETTING ADVICE ABOUT YOUR BENEFITS
As your employer, the State cannot tell you which benefits to choose. Reading this booklet and other information about your benefits (see pages 23-62) provides enough information for most employees to make their decisions. However, if you still want guidance, you may want to talk to an appropriate expert about your situation. One or more of these financial advisors may be able to help you.
An accountant can help you decide which
benefits provide the best financial protection and also can help you estimate tax savings.
A financial planner can help you choose
benefits that fit your needs for the short term and the long term. A financial planner also can be helpful in planning your retirement income. Some financial planners also sell financial products like insurance, stocks, annuities, etc.
An insurance broker/agent can
provide advice about your beneflt choices; however, he or she may also try to sell you insurance.

WHO'S ELIGIBLE TO PARTICIPATE
In general, you are eligible to participate in the Flexible Benefits Program if you are a full-time regular employee.
A "full-time regular employee" is an employee who works at least 30 hours a week and is expected to work for at least nine months. However, some employeessuch as those who work in a sheltered workshop or work transition program, contingent employees, temporary employees, and student employeesare not eligible.
If you aren't sure whether you're eligible, ask your personnel/payroll office.
Defen-ed Compensation Plan eligibility differs somewhat from the Flexible Benefits Program. See page 52 for more infonnation.
YOU DECIDE ...THEN SIGN UP FOR BENEFITS
After you've decided which benefits are best for you, it's time to sign up for them. To sign up:
Take outyour personalized Option Statement.
Read it over carefully, so you'll know what's required.
Ifany information about you is incorrect,
immediately contact your personnel/payroll office.
Read the "Terms and Conditions" on the back ofthe form before you sign.

A lawyer may provide helpful advice if you are
required to provide benefit coverage for an ex-spouse or children by an ex-spouse. A tax lawyer can help you decide which benefits are best for you from a tax savings perspective.
In choosing any financial expert, you should ask for a preliminary interview. Ask questions about the expert's credentials, experience with situations like yours, and billing policies, before making a commitment to work with this expert.

Check one coverage level (or "no coverage'') in
each benefit area on your Option Statement.
Fill in the dollar amounts you want contributed to
your spending accounts from your paycheck each
month (a minimum of$10 and in whole dollars). Review your Option Statement to see which
choices require Medical Underwriting.
Check the form over again to make sure it's
complete and accurate. Sign and date the form.

Remember, you make your benefit choices
for an entire plan year. (See page 22)

Ifyou do not complete and return your Option

.. - - - - - - - - - - - - - - - ,

Statement, all ojyour 1997-98 choices will rollover in 1998-99.
'---------------

Enrollment Section

WHAT'S AHEAD IN YOUR BENEFITS FUTURE?
Have you turned a comer in your life? Have your benefit needs changed recently? Do you expect them to change soon? You may not need a crystal ball to look ahead, just a good map.
Take a look at the next eight pages and find the one that best corresponds to your family situation. Then use the information on those pages to help you make your Flexible Benefits Program decisions.

Single (with no children)
Single (with children)
Married (with no children) Married (with children)

page 8 page 10 page 12 page 14

For several benefits, you will need to complete a Medical Underwriting process and be approved by the appropriate insurance company before you have coverage.
This Enrollment Section also includes enrolling information tips for these special situations:
Employees who have benefit coverage from their
s spouse employer;
Newly eligible State employees; and
Employees married to another State employee.

.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

What'sL8head? .
fJ.i~ile.tJftj no Children

LIFE INSURANCE-page 24 First, I need to add up my financial obligations. How much money would my survivors need to pay off my debts? mat other sources could be used to pay my obligations? private life insurance
payouts from the Retirement System
Deferred Compensation
If my debts are larger than my assets, I should consider life insurance to fill the gap.
DEPENDENT LIFE INSURANCE-page 25 If I do not have a spouse or children, I do not need this coverage.
AD&D INSURANCE-page 25 Look at my answers for life insurance (above). Would my survivors need additional income if I died? AD&D coverage could provide it if! died in a covered accident. Additional reasons to consider AD&D are: frequent travel
physically hazardousjobs
If my debts are greater than my assets, or I am at risk for a serious accident, I should consider AD&D Insurance.

Do I have at least six months of sick leave and annual leave which would provide income until longterm disability benefits could start?
If I don't have a source of income while I'm sick and can't work, I should consider short-term disability Insurance.
LONG-TERM DISABILITY INSURANCEpages 27-28 Is there someone else who would support me if I couldn't work? mat other sources of income would I have after I was disabled for six months or more? disability retirement benefits
payouts from Deferred Compensation or other savings
Social Security (remember, many disabilities do not qualifj for Social Security benefits)
If I don't have a source of income while I'm sick and can't work after six months of disability, I should consider long-term disability insurance.
LEGAL INSURANCE-pages 29-31 Do I expect legal expenses next year? Do I want easy access to a lawyer? Do I usually have lots of legal expenses?
If I answer yes to these questions, I should consider legal insurance.

-----------------.4';-----------------

HEALTH COVERAGE-pages 32-35
Do I have another source of health coverage? If not, I need to choose one of the State options. Here are the differences:
THE STANDARD OR HIGH OPTION
I choose my own doctors
Several cost-savings features
High Option pays more ofbills ifI have
high expenses
Standard Option more cost effective ifI have
few expenses
Preventive coverage is limited
HMOS
Emphasize preventive care
I have a primary care physician
Eligibility is based on where I live or work
DENTAL COVERAGE-pages 36-39
First, I need to add up my expected dental expenses for the next year. Will I save money by having dental coverage or is it better to pay dental expenses out of my pocket? Could I use my health care spending account for planned dental expenses? Do I frequently have unplanned dental expenses?
LONG-TERM CARE INSURANCE-pages 48-49 If I became ill or injured and required assistance with the activities of daily living, who would care for me? Where would I receive care? How would I pay for my care?
If I do not have answers for these questions, I may want to consider long-term care insurance.

SPENDING ACCOUNTS-pages 40-47
The two worksheets below help you decide how much money to put in each spending account for 1998-99.

Health Care Spending Account Worksheet

Medical deductibles

$-

Dental deductibles

$-

Medical co-payments

$-

Dental co-payments

$-

Adult orthodontia

$-

Prescription glasses/contacts

$-

Hearing care

$-

Other (see page 40)

$-

TOTAL

$-

Dependent Care Spending Account Worksheet

Care for children under age 13

$-

Qualifying preschool or kindergarten

$-

Qualifying camp, summer programs

$-

Care for dependent adult

$-

Other (see page 43)

$-

TOTAL

$-

DEFERRED COMPENSATION-pages 50-58
Will I have less than 20 years with the State when I retire? If so, I may need to increase my supplemental retirement savings.
What other needs might I want to save for?
take a few years away from work open a business fulfill another dream

YOU'VE DECIDED!
Remember to sign your Option Statement and complete any needed forms. Turn everything in by the deadline. Enroll in Deferred Compensation anytime using the forms described on page 21.
And...remember to re-evaluate your choices if you get married or have/adopt a child.

.. ---------------~

.-----------------

,--,

LIFE INSURANCE-page 24 First, I need to add up my financial obligations. How much money would my survivors need to pay off my debts? How much money will my children need for living expenses, or for college? What other resources are available? private life insurance
payouts from the Retirement System
Deferred Compensation
If my debts are larger than my assets or my children would not have enough money if I died, I should consider life insurance to fill the gap.
DEPENDENT LIFE INSURANCE-page 25 Could I cover the funeral and other expenses if a child died? Do my children have adequate coverage elsewhere?
I should consider dependent life insurance if the answer to these questions is no.
AD&D INSURANCE-page 25 Look at my answers for life insurance (above). Would my children and other survivors need additional income if I died? AD&D coverage could provide it if I died in a covered accident. Additional reasons to consider AD&D are: frequent travel
physically hazardous jobs
If my debts are greater than my assets, or I am at risk for a serious accident, I should consider AD&D Insurance.

SHORT-TERM DISABILITY INSURANi@rL.,Y::I:::
page 26 Do I have at least six months of sick leave and annual leave which would provide income until longterm disability benefits could start?
If I don't have a source of income while I'm sick and can't work, I should consider short-term disability Insurance.
LONG-TERM DISABILITY INSURANCEpages 27-28 Is there someone else who would support me and my children if I couldn't work? What other sources of income would I have after I was disabled for six months or more? disability retirement benefits
payouts from Deferred Compensation or other savings
Social Security (remember, many disabilities do not qualifY for Social Security benefits)
If I don't have a source of income while I'm sick and can't work after six months of disability, I should consider long-term disability insurance.
LEGAL INSURANCE-pages 29-31 Do I expect legal expenses next year? Do I want easy access to a lawyer? Do I usually have lots of legal expenses?
If I answer yes to these questions, I should consider legal insurance.

------------------......------------------

HEALTH COVERAGE-pages 32-35
Do my children and I have another source of health coverage? If not, I need to choose one of the State options. Here are the differences:
THE STANDARD OR HIGH OPTION
I choose my own doctors Several cost-savings features
High Option pays more ofbills ifI have high
expenses
Standard Option more cost effective ifI have
few expenses Preventive coverage is limited
HMOS

SPENDING ACCOUNTS-pages 40-47
The two worksheets below help you decide how much money to put in each spending account for 1998-99.

Health Care Spending Account Worksheet

Medical deductibles

$-

Dental deductibles

$-

Medical co-payments

$-

Dental co-payments

$-

Adult orthodontia

$-

Prescription glasses/contacts

$-

Hearing care

$-

Other (see page 40)

$

TOTAL

$-

Dependent Care Spending Account Worksheet

Care for children under age 13

$-

Qualifying preschool or kindergarten

$-

Qualifying camp, summer programs

$-

Care for dependent adult

$-

Other (see page 43)

$-

TOTAL

$

Emphasize preventive care
I have a primary care physician
Eligibility is based on where I live or work
DENTAL COVERAGE-pages 36-39
First, I need to add up my family's expected dental expenses for the next year. %11 I save money by having dental coverage or is it better to pay dental expenses out of my pocket? Could I use my health care spending account for planned dental expenses? Does my family frequently have unplanned dental expenses?
LONG-TERM CARE INSURANCE-pages 48-49 If I became ill or injured and required assistance with the activities of daily living, who would care for me? \here would I receive care? How would I pay for my care?

DEFERRED COMPENSATION-pages 50-58
%11 I have less than 20 years with the State when I retire? If so, I may need to increase my supplemental retirement savings.
\hat other needs might I want to save for?
take a few years away from work open a business
fulfill another dream
YOU'VE DECIDED! Remember to sign your Option Statement and complete any needed forms. Turn everything in by the deadline. Enroll in Deferred Compensation anytime using the forms described on page 21.
And...remember to re-evaluate your choices if you get married or have/adopt another child.

If I do not have answers for these questions, I may want to consider long-term care insurance.
.... ----------------- _---------------

What'~Ahead?

I\a

Mfii:Fi"lJ!wzth no Childfld"I%WA)/

i%'iEriiI'

LIFE INSURANCE-page 24

~~~eR~~TERM DISABILITY INtfE-

First, I need to add up my financial obligations. How much money would my survivors need to pay off my debts? Does my spouse depend on my income? What other sources could be used to pay my obligations or support my spouse?
private life insurance
payouts from the Retirement System

Do I have at least six months of sick le~ftti~J
annual leave which would provide income until longterm disability benefits could start? .
If I don't have a source of income while I'm sick and can't work, I should consider short-term disability lllsurance.

Deferred Compensation
If my debts are larger than my assets, or my spouse would not have enough money if I died, I should consider life insurance to fill the gap.
DEPENDENT LIFE INSURANCE-page 25 Could I cover the funeral and other expenses if my spouse died? Does my spouse have adequate coverage elsewhere?
I should consider dependent life insurance if the answer to these questions is no.
AD&D INSURANCE-page 25 Look at my answers for life insurance (above). Would my spouse and other survivors need additional income if! died? AD&D coverage could provide it if! died in a covered accident. Additional reasons to consider AD&D are: frequent travel
physically hazardousjobs

LONG-TERM DISABILITY INSURANCEpages 27-28 Could my spouse support me if I couldn't work? What other sources of income would I have after I was disabled for six months or more? disability retirement benefits
payouts from Deferred Compensation or other savings
Social Security (remember, many disabilities do not qualifY for Social Security benefits)
If I don't have a source of income while I'm sick and can't work after six months of disability, I should consider long-term disability insurance.
LEGAL INSURANCE-pages 29-31 Do I expect legal expenses next year? Do I want easy access to a lawyer? Do I usually have lots of legal expenses?
If I answer yes to these questions, I should consider legal insurance.

If my debts are greater than my assets, or I am at risk for a serious accident, I should consider AD&D insurance.

.. ----------------~

~----------------

HEALTH COVERAGE-pages 32-35
Do my spouse and I have another source of health coverage? If not, I need to choose one of the State options. Here are the differences:
THE STANDARD OR HIGH OPTION
I choose my own doctors
Several cost-savings features
High Option pays more ofbills ifI have high
expenses
Standard Option more cost effective ifI have
few expenses
Preventive coverage is limited
HMOS
Emphasize preventive care
I have a primary care physician
Eligibility is based on where I live or work
DENTAL COVERAGE-pages 36-39
First, I need to add up my family's expected dental expenses for the next year. VVill I save money by having dental coverage or is it better to pay dental expenses out of my pocket? Could I use my health care spending account for planned dental expenses? Does my spouse have dental coverage? Does my family frequently have unplanned dental expenses?
LONG-TERM CARE INSURANCE-pages 48-49 If I became ill or injured and required assistance with the activities of daily living, who would care for me? Where would I receive care? How would I pay for my care?
If I do not have answers for these questions, I may want to consider long-term care insurance.

SPENDING ACCOUNTS-pages 40-47
The two worksheets below help you decide how much money to put in each spending account for 1998-99.

Health Care Spending Account Worksheet

Medical deductibles

$-

Dental deductibles

$-

Medical co-payments

$-

Dental co-payments

$-

Adult orthodontia

$-

Prescription glasses/contacts

$-

Hearing care

$-

Other (see page 40)

$-

TOTAL

$-

Dependent Care Spending Account Worksheet

Care for children under age 13

$-

Qualifying preschool or kindergarten

$-

Qualifying camp, summer programs

$-

Care for dependent adult

$-

Other (see page 43)

$-

TOTAL

$-

DEFERRED COMPENSATION-pages 50-58
Will I have less than 20 years with the State when I retire? If so, I may need to increase my supplemental retirement savings.
What other needs might I want to save for?
take a few years away from work open a business
fulfill another dream

YOU'VE DECIDED!
Remember to sign your Option Statement and complete any needed forms. Turn everything in by the deadline. Enroll in Deferred Compensation anytime using the forms described on page 21.
And...remember to re-evaluate your choices if your marital status changes or you have/adopt a child.

----------------C:----------------

What'siAhead?
M~:;iJJIJfth Chfldren

LIFE INSURANCE-page 24 First, I need to add up my financial obligations. How much money would my survivors need to pay off my debts? How much money will my spouse and children need for living expenses/college? Does my spouse depend on my income? What other sources could be used to pay my obligations? private life insurance
payouts from the Retirement System
Deferred Compensation
If my debts are larger than my assets, or my family would not have enough money if I died, I should consider life insurance to fill the gap.
DEPENDENT LIFE INSURANCE-page 25 Could I cover the funeral and other expenses if my spouse or a child died? Do my children or spouse have adequate coverage elsewhere?
I should consider dependent life insurance if the answer to these questions is no.
AD&D INSURANCE-page 25 Look at my answers for life insurance (above). Would my family or other survivors need additional income if I died? AD&D coverage could provide it if I died in a covered accident. Additional reasons to consider AD&D are: frequent travel
physically hazardous jobs

SHORT-TERM DISABILITY INSURANCEpage 26 Do I have at least six months of sick leave and annual leave which would provide income until longterm disability benefits could start?
If I don't have a source of income while I'm sick and can't work, I should consider short-term disability Insurance.
LONG-TERM DISABILITY INSURANCEpages 27-28 Could my spouse support the family if I couldn't work? What other sources of income would I have after I was disabled for six months or more? disability retirement benefits
payouts from Deferred Compensation or other savings
Social Security (remember, many disabilities do not qualify for Social Security benefits)
If I don't have a source of income while I'm sick and can't work after six months of disability, I should consider long-term disability insurance.
LEGAL INSURANCE-pages 29-31 Do I expect legal expenses next year? Do I want easy access to a lawyer? Do I usually have lots of legal expenses?
If I answer yes to these questions, I should consider legal insurance.

If my debts are greater than my assets, or I am at risk for a serious accident, I should consider AD&D insurance.

---------------48---------------

HEALTH COVERAGE-pages 32-35
Does my family have another source of health coverage? If not, I need to choose one of the State options. Here are the differences:
THE STANDARD OR HIGH OPTION
I choose my own doctors
Several cost-savings features
High Option pays more ofbills ifI have
high expenses
Standard Option more cost effective ifI have
few expenses
Preventive coverage is limited
HMOS
Emphasize preventive care
I have a primary care physician
Eligibility is based on where I live or work
DENTAL COVERAGE-pages 36-39
First, I need to add up my family's expected dental expenses for the next year. Will I save money by having dental coverage or is it better to pay dental expenses out of my pocket? Could I use my health care spending account for planned dental expenses? Does my family frequently have unplanned dental expenses?
LONG-TERM CARE INSURANCE-pages 48-49 If! became ill or injured and required assistance with the activities of daily living, who would care for me? Where would I receive care? How would I pay for my care?
If I do not have answers for these questions, I may want to consider long-term care insurance.

SPENDING ACCOUNTS-pages 40-47
The two worksheets below help you decide how much money to put in each spending account for 1998-99.

Health Care Spending Account Worksheet

Medical deductibles

$-

Dental deductibles

$-

Medical co-payments

$-

Dental co-payments

$-

Adult orthodontia

$-

Prescription glasses/contacts

$-

Hearing care

$-

Other (see page 40)

$-

TOTAL

$

Dependent Care Spending Account Worksheet

Care for children under age 13

$-

Qualifying preschool or kindergarten

$-

Qualifying camp, summer programs

$-

Care for dependent adult

$-

Other (see page 43)

$-

TOTAL

$-

DEFERRED COMPENSATION-pages 50-58
"Will I have less than 20 years with the State when I retire? If so, I may need to increase my supplemental retirement savings.
What other needs might I want to save for?
take a few years away from work open a business
fulfill another dream

YOU'VE DECIDED!
Remember to sign your Option Statement and complete any needed forms. Turn everything in by the deadline. Enroll in Deferred Compensation anytime using the forms described on page 21.
And...remember to re-evaluate your choices if your marital status changes or you haveladopt another child.

----------------,-..------------------

Additioilal Considerations

WHEN YOUR SPOUSE HAS BENEFIT COVERAGE
If your spouse works for an employer who offers benefit coverage, it is important to read about the benefits offered by your spouse's plans.
Health insurance
It is particularly critical to read all information about the health benefits offered by your spouse's company. If you decline State Health Benefit Plan coverage and choose coverage under your spouse's plan, you may be penalized by the other plan.
Also, if you take "double coverage"-both you and your spouse take family coverage-you may find that the other company's plan will not pay any benefits if the State plan pays benefits first. This is called "nonduplication of benefits."
Spending accounts
If your spouse's plan offers spending accounts, you can each have a health care spending account at the maximum allowed. However, IRS laws restrict your total family contributions to all child (dependent) care spending accounts to a total of $5,000 per year.
Savings plans
Your spouse may save the maximum allowed in his or her company's savings plan and you may save the applicable maximum allowed in your choice of the State's Deferred Compensation Plans. There is no family maximum.
Legal insurance
Few employers offer legal insurance. It may be worth considering if your family has legal needs.
Long-term care insurance
Few employers offer long-term care insurance. This coverage is available to all eligible employees and some dependents.

WHEN YOU ARE A NEW EMPLOYEE
Life insurance
You have a one-time opportunity to choose some life insurance coverage without providing Medical Underwriting. See the chart on page 19.
You have a one-time opportunity to take dependent life insurance coverage without providing Medical Underwriting for your dependents.
Disability coverage
You have a one-time opportunity to sign up for short-term and long-term disability coverage without providing Medical Underwriting.
Dental benefits
You have much shorter waiting periods for dental benefits if you sign up immediately. You will be subject to late enrollment penalties if you do not enroll now, but do so in the future.
Long-term care insurance
You have a one-time opportunity to sign up for long-term care insurance without providing Medical Underwriting.
Other coverage
There are no Medical Underwriting Requirements at any time for legal insurance, AD&D coverage, spending accounts, or the State Health Benefit Plan. (However, coverage could be limited for pre-existing conditions under the Standard and High Options of the State Health Benefit Plan. If you are eligible and join an HMO, there are no pre-existing condition limitations.) You can sign up for the Deferred Compensation Plans anytime.

.. - - - - - - - - - - - - - - - , - - - - - - - - - - - - - - -

WHEN YOUR SPOUSE WORKS FOR THE STATE
If you are married to another State employee covered by the Flexible Benefits Program, you may have some advantages:

BENEFIT
Deferred ,','J;ompensationPlan&,,',',,

SPECIAL OPTIONS
Each of you may contribute up to the maximum for your salary and plan. If both spouses have accounts, you could have a substantial nest egg at retirement.

Each of you may take single coverage (in different options, if you wish); however, your children will not be covered. As an alternative, one of you may take family coverage and cover your spouse and children. If you both take family coverage, the most the plan will pay is 100% of the allowable expenses.

Each of you may provide dependent insurance for your children and the other spouse. Or, if you wish, one spouse may take coverage and the other spouse could choose "no coverage."

Each of you can enroll for the coverage you need.

Employee,.LifeandAD&D. .#ealth,.,BenefitQptions",,. ,

Each of you can enroll for the coverage you need.
Each of you may take single coverage (in different options, if you wish); however, your children will not be covered. As an alternative, one of you may take family coverage and cover your spouse and children. If you both take family coverage, the most the plan will pay is 100% of the allowable expenses.

Each of you may take single coverage (in which case, any children will not be covered), or one of you may take family coverage and cover your spouse and children.

Each of you may enroll for the coverage you need.

Each of you may have spending accounts; however, you cannot exceed the $4,992 family maximum for the child (dependent) care spending account.

.. ---------------- ----------------

Me1icaliPp~'~~PP~iR~Q~~~M:epts.

andli.orrnsr.Tor.~ornplete .

.

,... ',

-.-',

This section describes the forh~syotllnus~w[tlplet6 along with your Option State~tl~~!li.forHttihl&l1l'd~lCe, dependent life, short- and long",tern'idisahility;:ldd.. . long-term care insurance, you must complete the appropriate Medical Underwriting Requirements and be approved by the insurance company before you receIve coverage.

FORMS TO COMPLETE FOR LIFE INSURANCE
In addition to your Option Statement, you may be required to complete some of these forms. Use the chart on the next page to help you determine which forms are needed.

..... If an,impHEed hloo~.testis r&Juirtd
..... (:Ii) r.hent~xtpage },YiIU lilUS!();lmpkte ,n" H";L UNUM, the insurance company, will provide the blood test at no charge to you and the test will require a minimum amount of your time. After your completed Evidence of Insurability Form has been received by UNUM, you will be contacted by the paramedic company responsible for collecting the blood. The amplified blood test also includes measurement of blood pressure, pulse, height, and weight. If you have any questions about the amplified blood test process, please call UNUM toll free at 1-888-764-3539 (or just remember 1-888-S0G-FLEX).

UNUM Evidence ofInsurability (ElI) Form
New Employees If this form is required (see the chart on the ":+b:::~~~::::::>next page), complete it, and return it to your :W{fi.:m~ncyalong with your Option Statement by ""\.:::.., ;::::::~H~adline. The insurance company may require ;) ":'. -dfiilal medical information based on the infor-
::::~.;~~:~nyour fonn.
If this form L':::::::::::~*ed (see the chart on the next page), com . '::::;::::..:,j~, and return it to your agency along with ":::::::::r::Qption Statement by the deadline. The ins ":':::':'::::;hsompany may require additional medical infon ":::'::'Mthased on the infor-

Flexible Benefits Beneficiary Election Form
The first time you take life insurance coverage, you must name your beneficiaries on this form. If you have an address change or beneficiary change, make sure you update your beneficiary information by filling out another form. You are always the beneficiary of dependent life insurance.

"%;;;;;
- - - - - - - - - - - - - -....r - - - - - - - - - - - - - -

NEW EMPLOYEES WHO CHOOSE COVERAGE
One times pay Two times pay (less than $50,000) Two times pay ($50,000 or more) Three times pay (less than $50,000) Three times pay ($50,000 or more) Dependent coverage

CURRENT EMPLOYEES

One, two, or three times pay (less than $50,000 coverage)
One, two, or three times pay ($50,000 or more coverage)
Dependent coverage

UNUM Evidence of Insurability Form

ampliH~~~ UNUM Evidence of Insurability Form and

.

UNUM Evidence of Insurability Form

Important! VVhen you request new or additional coverage, and your medical history warrants, the insurance carrier may ask for additional information-including an amplified blood test-even if your new coverage is for less than $50,000.

* Additional limitations may apply ifyou are enrolled in an agency life plan.

FORMS TO COMPLETE FOR AD&D INSURANCE
In addition to your Option Statement, you may be required to complete this form:
Flexible Benefits Beneficiary Election Form
If you have taken life insurance coverage, the beneficiary you name for your life insurance benefits is also the beneficiary for your AD&D benefits. If you didn't take life insurance coverage, you should complete a Flexible Benefits Program Beneficiary Election Form for your AD&D coverage. You can change beneficiaries anytime by filing a new form with your department.
FORMS TO COMPLETE FOR SHORT-TERM DISABILITY INSURANCE*
In addition to your Option Statement, you may be required to complete the Disability Underwriting Process. This process includes the timely completion and submission of the UNUM Evidence of Insurability form.
If you are a current employee not already enrolled in the short-term disability plan and selecting it this Open Enrollment, you must complete the UNUM Evidence ofInsurability form and return it to your agency by the required deadline.
In addition to the Evidence of Insurability form, you may be required to furnish additional information. This additional information may include additional medical history questions, an amplified blood test and/or a paramedical examination. UNUM may also request medical records from your physician. This additional information will be at no expense to you. To help speed up the underwriting process, you may be contacted by telephone by UNUM or one of UNUM's representing companies for some information. Should you have any questions, please contact UNUM's medical underwriting staff toll-free at 1-888-764-3539 (or just remember 1-888-S0G-FLEX).

FORMS TO COMPLETE FOR LONG-TERM DISABILITY INSURANCE*
In addition to your Option Statement, you may be required to complete the Disability Underwriting Process. This process includes the timely completion and submission of the UNUM Evidence of Insurability form.
If you are a current employee not already enrolled in the long-term disability plan and selecting it this Open Enrollment, you must complete the UNUM Evidence of Insurability form and return it to your agency by the required deadline.
In addition to the Evidence of Insurability form, you may be required to furnish additional information. This additional information may include additional medical history questions, an amplified blood test and/or a paramedical examination. UNUM may also request medical records from your physician. This additional information will be at no expense to you. To help speed up the underwriting process, you may be contacted by telephone by UNUM or one of UNUM's representing companies for some information. Should you have any questions, please contact UNUM's medical underwriting staff toll-free at 1-888-764-3539 (or just remember 1-888-S0G-FLEX).
FORMS TO COMPLETE FOR LONG-TERM CARE INSURANCE
In addition to your Option Statement, you may be required to complete this form:
Long-lirm Care Insurance Application *
If you select long-term care insurance for the first time, or are currently in the plan and wish to increase your benefit level or add options, you must complete the Long-Term Care Insurance Application. This form may be obtained by calling UNUM at 1-800-227-4165 or from your local personnel/payroll office.
* Ifyou are a new employee and select this coverage, you do not have
to complete this form. See page 16.

.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

FORMS TO COMPLETE FOR HEALTH BENEFITS
In addition to your Option Statement, you may be required to complete some of these forms:
Dependent and Miscellaneous Update Form
If you are signing up for family coverage during Open Enrollment, complete this form in addition to your Option Statement. After Open Enrollment, this form will be used to add and delete dependents and for miscellaneous updates.
Enrollment Supplement fir HMOs Form
If you are signing up for an HMO for the first time or changing HMOs, complete this form in addition to your Option Statement. Some HMOs need to receive your primary care doctor selection(s) on this form before issuing your ID card(s). Therefore, to avoid possible delays in receiving your ID card(s), be sure to complete and return the form as soon as possible.
HMO Residence Requirement TVaiver Form
If you are signing up for an HMO and your eligibility is based solely on working in the HMO's service area, you must sign this form acknowledging that non-emergency care must be received within the HMO's service area. Return the signed form to your personnel/payroll office.
Discontinuation ofHealth Benefit Coverage Form
If you discontinue your coverage during Open Enrollment, complete this form in addition to your Option Statement.
State Health Benefit Plan Membership Form
(Not needed for Open Enrollment.) During the Open Enrollment period, enrollment or change of coverage option and/or type is reported on the Option Statement only.
After the Open Enrollment period, anyenrollment, transfer, or other allowable change in coverage requires that you complete this form in addition to your Option Statement.

Declination ofHealth Benefit Coverage Form
If you decline coverage as a new employee, complete this form in addition to your Option Statement.
If you are ineligible for coverage based on your employment status, you also must complete this form.
FORMS TO COMPLETE FOR THE DEFERRED COMPENSATION PROGRAM
To enroll in either the 40 1(k) or 457 Deferred Compensation Plan, you are required to complete one or both of the following forms for such Plan. (Each Plan has forms specific to that Plan. Make sure you get the correct forms.)
Deferred Compensation Plan Participation Agreement
Request this form from your personnel/payroll office to enroll in the chosen Deferred Compensation Plan for the first time, or to make changes in your contribution or investment decisions.
Deferred Compensation Plan Beneficiary Election Form
Request this form from your personnel/payroll office when you enroll in the selected Plan for the first time or when you want to update beneficiary information or change your beneficiary.
Deferred Compensation Spousal TVaiver Form (401 (k) only)
Request this form from your personnel/payroll office when you enroll in the 401 (k) plan if you are married and are electing anything other than 100% spousal beneficiary.

---------------.----------------

After YbllEnrol1

WHEN COVERAGE BEGINS
Generally, coverage for new options will begin on July 1, provided you have met all contractual and administrative requirements. If you have just begun to work for the State, your coverages become effective the first day of the month after you have completed a full calendar month of employment.
CONFIRMING YOUR CHOICES
You will receive a Confirmation Statement. Check it against your Option Statement to be sure your choices were correctly entered. However, the Confirmation Statement does not guarantee your coverage in some benefits. If you have not completed and submitted the additional required forms and been approved by the respective insurance companies, the choices shown on your Confirmation Statement for life and dependent life insurance, short- and long-term disability insurance, long-term care, and State Health Benefit Plan Standard, High, and HMO Options may not be valid.
Your new premiums for your health benefit plan and spending account reductions begin June 15; other premiums begin June 30. See specific plan booklets for information about when your coverage begins.
Compare your paycheck statements with your Option Statement. It is your responsibility to notifj
your personnel/payroll office ifthere is a problem.
If you are a new employee, complete your Option Statement and other needed forms by your agency's deadline, but no later than 31 days after your hire date. Your coverage will begin on the first day of the month after you have completed a full calendar month of service.

TO CHANGE YOUR DECISIONS
Every Open Enrollment, you will be able to change your benefit decisions based on which benefits are right for you. Remember, this is an annual agreement to allow the State to purchase benefits for you through pre-tax premiums.
The Internal Revenue Service (IRS) limits changes in coverage or cancellation of your coverage. However, if you have one of the following qualifying family status changes, you may be eligible to enroll into or change some of your benefits: when you acquire an eligible dependent or lose all eligible dependents; when you lose your coverage under a spouse's plan during the year; when you gain dual family coverage due to marriage; or when you gain new coverage under a plan that covers your spouse at his or her new place of employment.
You must notify your personnel/payroll office in writing within a certain time frame. Refer to the Option Statement Terms and Conditions, the individual Summary Plan Documents, and the SHBP Booklet for timely filing requirements.
. Your written request should be dated and given to your personnel/payroll office. (Refer to the "Medical Underwriting Requirements and Forms to Complete" section on page 21 for any forms you must complete to change your options.) Any changes will go into effect the first of the month following the date when the payroll is changed to reflect your new choice.
IMPORTANT NOTE

- - - - - - - - - - - - - - - -. .r - . - - - - - - - - - - - - - - - -

Infofll1ation Resource
Today, information is available at the touch of a button, a click of a mouse or the Hip of the page. Sometimes it's too much informatMh and it h;b no application to your life. But in thisdWe,llippllli[ a page could be very important toyou d<l\li)hero~M, benefit-wise that is. Use this section lor moredetailed information about the Flexible Benefits Program and for specific information about each of the benefit plans. The Tax Tips in each section can help you understand how your benefit selection will affect your taxes.
---------------~---------------

Life and AD&D Insurance

LIFE INSURANCE FOR YOU
If you participate in a State retirement system, you may have life insurance protection. However, if you don't participate in a State retirement system, or if you want to supplement this protection, you may choose group term life insurance coverage equal to:
One times your pay;
Two times your pay; or
Three times your pay, up to $300,000.
Your premium cost for life insurance is based on your age, salary, and on the amount of coverage you choose. You may pay your premiums with pre-tax or after-tax dollars if you choose coverage over $50,000. (See the "Tax Tips" to the right.)

The life insurance amount you choose is paid to your beneficiaries if you die while this coverage is in effect. Your beneficiaries are the persons you name to receive your life insurance benefits. If you are choosing life insurance for the first time, name your beneficiaries by completing the Flexible Benefits Program Beneficiary Election Form. You can change your beneficiaries anytime by completing a new form.
If you leave State employment, you may convert your coverage to an individual life policy at rates provided by the insurance company. If you leave employment for reasons other than sickness or injury, you may be eligible for the portability provision. For conversion or portability information, contact UNUM at the toll-free number 1-888-764-3539 (or just remember 1-888-S0G-FLEX).

The life insurance amount you choose will be based

on your Benefit Salary as of April 1, 1998, or your date of hire (whichever is later). This amount is rounded up to the next higher $1,000. If you are already enrolled

i

for life insurance, the amount of your coverage and premium has been adjusted for your April 1, 1998 pay

;

and age. If you are age 65 or older, the value of your

life coverage is reduced. (See the Summary Plan

Document for details.)

~:...

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.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DEPENDENT LIFE INSURANCE
If you choose life insurance for yourself, you also may choose life insurance coverage for your dependents equal to:
$6,000 for your spouse and $3,000 for each child.
Your children are eligible for coverage if they are dependent on you for support and are between 14 days and 19 years old. If a new dependent is confined to the hospital, coverage begins the day after discharge. An unmarried, full-time student is eligible until age 26. Physically handicapped and mentally retarded children may be eligible beyond age 19, but must be approved by the insurance company within 60 days of their 19th birthday.
You are the beneficiary and will receive the insurance benefit if your spouse or a covered child dies.
Dependent life insurance is paid with after-tax premiums.

ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE
The Flexible Benefits Program lets you decide if you want accidental death and dismemberment (AD&D) insurance coverage equal to:
One times your pay;
Two times your pay; or
Three times your pay, up to $300,000.
Your cost depends on how much accidental death and dismemberment insurance you choose. Like life insurance, your coverage will be based on your Benefit Salary as of April 1, 1998 or your date of hire (whichever is later). This amount is rounded to the next higher $1,000. If you are age 75 or older, the value of your coverage is reduced.
Your death or injury must be the result ofa covered accident for the accidental death and dismemberment insurance to be paid to you or your beneficiary.

To be eligible for AD&D benefits for a permanent and total disability, your injury must prevent you from working at any job for which you are qualified by education, training, or experience.

Ifyou have any questions concerning how the life, dependent
life and AD&D insurance plans work, call 404-656-2730.

The beneficiaries you name for life insurance also are your beneficiaries for accidental death and dismemberment insurance. See the Summary Plan Document for details.

FOR EXAiV1PLE, IF YOU...

AD&D WOu"LDPAY

Become permanently
::-and.Jotallydisabled::::::::,:,: .
Lose two ormorelimbs*c~'
Losebearing.andspeech}
Lose one limb, hearing,
.::orspeech-::::::::::::,:
Lose thumb and index fingerfromthe.samehand

100% of your coverage
100% of your coverage* 100% of your coverage 100% of your coverage
50% of your coverage
25% of your coverage

* Paid in monthly installments over the period ofyour disability. ** A "limb" is a hand, foot, or sight in one eye.

---------------'c.,..----------------

Disability.lnsurance .

The chances of becoming disabled and unable to work are higher than most people think (see chart below). To help provide protection, the Flexible Benefits Program allows you to choose:
Short-term disability insurance; and/or
Long-term disability insurance.
The long-term disability insurance has been improved with a higher monthly benefit minimum and maximum.

"PRE-EXISTING CONDITIONS"
Disability benefits will not be paid for any disabling condition (such as pregnancy) which exists before coverage begins. These are called "pre-existing conditions." Refer to the Disability Summary Plan Document for details.
SHORT-TERM DISABILITY PROTECTION
If you choose short-term disability coverage, this plan will work with other benefits* to replace 60% of your pay (as shown on your Option Statement), up to $800 per week.

If you become disabled and cannot work, you are eligible to receive short-term disability benefits after you have been disabled for 30 calendar days. You may choose whether to use sick leave or receive these benefits. Keep in mind that you cannot receive these benefits and sick leave at the same time. You may, however, decide to receive these benefits and save your sick leave for future use. Your short-term disability benefits can continue until you recover, return to work, or receive benefits for a maximum of 150 calendar days. The 150 calendar day maximum is reduced by any days of paid sick leave, donated leave or Special Injury Leave that you use which exceeds the 30 calendar day Elimination Period. Refer to the Disability Summary Plan document for details.

Your premiums will be based on your age and Benefit Salary. You pay for this coverage with after-tax premiums. You won't pay taxes on the benefits you receIve.

* These benefits include Social Security, workers' compensation, any other governmental disability programs, any other disability plans (including the State retirement systems), or special inju1y benefits you are eligible
to receive. Ifthese benefits total more than 60 % ofyour Benefit Salmy,
the short-term disability plan will not pay for this disability.

IMPORTANT NOTE
-

---------------c.>-----------------

LONG-TERM DISABILITY PROTEalON
The Flexible Benefits Program's long-term disability coverage works with other benefits you are eligible to receive.* The plan assures that your combined disability benefits from all sources will equal 60% of your pay (as shown on your Option Statement), up to $4,000 a month. Beginning this plan year, the plan will pay at least $100 a month, even if your disability benefits from all other sources total more than 60% of your Benefit Salary, unless you are in an overpayment situation.

** ** T A X TIP 5

These benefits will begin after you have been disabled for 180 calendar days and are reduced by any use of sick leave. Long-term disability benefits cease when you are no longer disabled or reach age 65.** If you become disabled after reaching age 60, however, your benefits could continue after age 65.

For the first two years of your disability, you are disabled if you cannot perform your occupation, and earn more than 80% of your monthly Benefit Salary from any employer. After that, you are disabled if you cannot work at any occupation for which you are qualified by education, training, or experience and earn more than 60% of your monthly Benefit Salary from any employer. Your cost for long-term disability coverage is based on your age, Benefit Salary, and whether or not you are eligible for disability coverage through any State of Georgia retirement plan (for example, if you have 13 years and 4 months of service with the Employees' Retirement System). Refer to the Disability Summary Plan Document for details.

Ifyou have any questions concerning how the short-term
and long-term disability insurance plans work or have questions about eligibility, call 404-656-2730. For questions concerning claims, call UNUM toll-free at 1-888-7643539 (orjustremember 1-888-S0G-FLEX).

* These benefits include Social Security, w01-kers' compensation, any other gove17lmental disability programs, any other disability plans (including the State 1Ttirement systems), or special injury benefits.
** BenefitsfiJ10 mental and neruous disorders are limited to two years.

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IF YOU ARE ELIGIBLE FOR EARLY RETIREMENT DUE TO DISABILITY
Some State employees are eligible for early retirement through a State retirement system in the case of total and permanent disability. As the chart on page 26 shows, most disabilities last less than two years. The State retirement systems would not pay benefits for these "non-permanent" disabilities. Coverage is only for permanent disability.

The chart below shows the maximum estimated percentage of salary that will be replaced by the Employees' Retirement System for a permanent disability. Contact the Employees' Retirement System for additional information at 404-352-6400.

MAXIMUM ESTIMATED PERCENTAGE OF SALARY THAT WILL BE REPLACED BY THE EMPLOYEES' RETIREMENT SYSTEM FOR A PERMANENT DISABILITY

NEW PLAN

Age at Disability

Years of Service at Disability

OLD PLAN

Age at

Years of Service at Disability

Disability

N/A 37% N/A 32% 49% N/A 28% 43% 55% N/A 23% 37% 49% 74% N/A 18% 31% 43% 66% 74% N/A SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR

N/A 48% N/A 42% 64% N/A 34% 56% 72% N/A 26% 45% 64% 90% :"':}}:::::::5.5:::::::::::: N/A 19% 35% 56% 85% SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR SIR

N/A means not available until 13 years and four months of creditable service. SIR means employee would take service :::retiremenknot,disability.<:::::::,:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::;:::,:,:,:,:,:::::::::;:::,:,:,:,:,:,:;:::,:,:,:,:,:,:,:,:,:,::::::.;:

N/A means not available until 13 years and four months of creditable service. SIR means employee would take service ::::::retiremenf;::I1Qtdisabi/ity;: ,:,:,:,:::,:,:,:,:,:,:: ,:,:,:,:,:,:,:,:,:,:,:,:,:,:, ,:,:,:,:,:,:,:,:::::::::::::,:, ,:,:,:,:::::,:,:,:::::::,:::::::.:.::., , .;

All percentages are based on your formula salary. Formula salary is your average monthly salary during eight consecutive calendar quarters which yields the highest average. For old plan members, your actualformula salary is 104.75% less $7.00 x the calculated average.
.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Leg~l Insurance

The Flexible Benefits Program allows you to choose:
Legal insurance fir yourself; or
Legal insurance fir you and your family.
When you choose coverage, the legal insurance plan provides protection against many unexpect~d situations where you may need legal representatIOn, including commonly used services, mortgage preparation and review, real estate matters, name changes, and consumer protection matters.
The plan also provides unlimited legal advice by a tollfree telephone hotline for situations where you might not call a lawyer; for example: threats by your landlord, or unsatisfactory work performed by a mechanic or contractor. In addition, the legal plan also helps with anticipated legal expenses, like the preparation o~ documents for buying or selling your home, or adopnon.

The legal insurance plan provides assistance in three ways:
A toll-free hotline (1-800-848-2012) available fir consultation and advice from lawyers at the Preventive LegalCare Office (pLCO). The .hotline is available during business hours (but 1S also available around the clock fir emergency consultation). Hearing impaired participants can call 1-800-952-0450.
Access to attorneys in your area who participate in this insurance plan $ network ofattorneys and who have agreed to provide legal services at contracted rates.
Benefits fir covered services you receive from your own attorney.
During the Open Enrollment period, you may call th~ legal
insurance plan at 1-800-848-2012 ifyou have questiOns
concerning how the legal insurance plan works.

.. - - - - - - - - - - - - - : - - - - - - - - - - - - -

HOW LEGAL INSURANCE WORKS
\Vhen you have a legal need and are covered by the plan, you call the toll-free telephone hotline. After your coverage is verified, a PLCO lawyer will speak with you. This lawyer will tell you if your legal need is covered by the plan and can give you additional information on benefits.
In many cases, you will be able to resolve your legal need with a phone call to a PLCO lawyer, or by sending materials to the PLCO lawyer for review. The PLCO lawyer also may write letters, or make phone calls on your behalf. All of these services are provided at no additional cost to plan participants.

COMMON LEGAL EXPENSES COVERED BY LEGAL INSURANCE
Here are a few of the expenses covered by the plan. Certain restrictions and frequency limitations apply. See the Legal Summary Plan Document available in your personnel/payroll office for more information.
Document preparation and review of
-Deeds - Durable Power ofAttorney - Mortgages/leases - Installment sales agreements - Promissory notes

If you need to meet with an attorney in person for a legal service, call the LegalCare Service Center and a customer service representative will send you a claim form and a list of participating attorneys in your area. Or, you can see the attorney of your choice.
After your legal situation is settled, you and your lawyer complete the claim form and return it to the msurance company.
The amount of benefits you receive for covered legal services depends upon the type of service provided and whether or not you use a lawyer who participates in this plan. Nonparticipating lawyers' fees are paid according to the schedule of benefits. Participating lawyers have agreed to set rates for each covered procedure, and in many cases, benefits will cover their fees in full.
If the charges by a lawyer are not fully paid by the plan, you are responsible for paying any remaining fees.

Adoptions, guardianship, and custody matters Wills Living Wills Enforcement ofguarantees, warranties, and
leases
Estate administration and closing Separation, divorce, annulments (without court
appearance)
Traffic charges defense (DUI or charges involv-
ing the State ofGeorgia are not covered)
Immigration and immigration application
processing
Administrative hearings for zoning or housing
code matters
Name changes

Purchase or sale ofprimary or secondary residence

Defense against debt collection, such as foreclosure, bankruptcy, eviction

Consumer protection

Misdemeanor charges againstjuveniles

IRS audit

Uncontested modification or enforcement of child custody agreement

Advice and consultation to have a driver's license reinstated

------------------~------------------

NONCOVERED LEGAL SERVICES
The legal insurance plan also provides limited reimbursement for legal services not covered by the plan, provided the service is not excluded. (See the list of exclusions on the right.) Payment for noncovered expenses is limited to two hours each calendar quarter.

EXCLUSIONS LIST There are some legal expenses not covered by the legal insurance plan. Here are some:
Administrative hearings or legal actions involving the State of Georgia
Criminal and felony actions
Tax return preparation
Estate planning and probate
Patents, copyrights, trademarks
U/orkers' or unemployment compensation
Medicaid issues
Defending against child support collection
DUI actions
Fines, court costs, filing fees, subpoenas, assessments, and penalties
Title insurance
Services not provided by a lawyer
Services provided by a relative
Suits involving the company insuring this plan
Participation in partnerships, corporations, or other business ventures
Legal matters discussed with a lawyer befOre coverage began under this plan
Legal matters in which both plaintiffand defendant are in the same family (except fOr those listed as covered expenses)

... ---------------~

_---------------

He:l\t~J Benefit QI2!ions

Under the State Health Benefit Plan, you may choose single or family coverage in:
The Standard Option;
The High Option; or
A Health Maintenance Organization (HMO), ifavailable where you live or work.
It's the State's policy to pay about 75% of the cost of the health plans. Your cost depends on the option you choose, and whether you choose single or family coverage. The premiums for the options for which you are eligible are shown on your Option Statement.

THE STANDARD ANOHIGH OPTIONS
The Standard and High Options cover most medical services you or other family members need in case of illness or injury. The difference between the two options is how much they pay toward your medical expenses. The High Option provides up to an additional $800 per person or $2,000 per family per year. Both options will pay benefits up to $1 million in each covered person's lifetime. However, coverage for new employees for a pre-existing condition is limited to $1,000 during the first 12 months of coverage under either Option. (This 12-month period can be reduced or eliminated under the provisions of the Health Insurance Portability and Accountability Act.)
The chart on page 35 gives a brief summary of how the Standard and High Options work. Some employees may have health coverage available from another source (for example, a spouse's plan or a private policy). If this describes your situation, you might want to compare the other insurance coverage with the Standard and High Options to see which is best for you.
Additional information about the Standard and High Options is available in the State Health Benefit Plan booklet. Refer to the most current issue of the UPDATER for up-to-the-minute Health Plan information.
lfyou have questions concerning how the State Health Benefit Plan works, call 404-233-4479 (inside metro Atlanta); or 1-800-483-6983 (outside metro Atlanta). For questions concerning eligibility and/or dependent ligibility, call 404-656-6322 (inside metro Atlanta);
1-800-610-1863 (outside metro Atlanta).

---------------.-1---------------

HEALTH MAINTENANCE ORGANIZATIONS
Health Maintenance Organizations (HMOs) are available in the Atlanta, Augusta, Macon and Savannah areas. This year some HMO availability has been extended to Dawson and Lumpkin counties in the Atlanta service area, and to Lincoln in the Augusta service area. (Check with your Comparison ofCoverage Options booklet to see if an HMO is available to you.) An HMO provides its participants with medical services on a prepaid basis. If you choose HMO coverage, you must receive non-emergency medical care from doctors and hospitals participating in the HMO. If your doctor leaves your HMO, you must select a new HMO doctor. Otherwise you may have to pay the full charge by non-participating providers of service. You cannot change options until the next Open Enrollment unless you have a qualifying event.
There are both advantages and disadvantages to belonging to an HMO. It is important to know that HMOs work differently from the regular insurance options. If you live or work in an HMO service area, the Comparison of Coverage Options booklet, available from your personnelJpayroll office, highlights these differences. The comparison also highlights any HMO changes. Benefit-specific information is available from your HMO.
If you join an HMO, be sure to request an HMO Member Handbook, available in your personnel/payroll office. The handbook explains rules regarding eligibility, appeals, and continuation of coverage.

USE YOUR PLAN WISELY-
SAVE $$$
Standard and High Option participants can save money by seeing physicians who are part of the Participating Physicians Program (PPP). By contract, the physicians participating in the PPP have agreed to not "balance bill" you over the amount allowed by the State Health Benefit Plan. You will only be responsible for paying the coinsurance and deductible amounts, and any non-covered charges. Most Georgia doctors participate. You can call a doctor's office directly to find out if he or she participates.
You may want to choose a primary care physician who can act as a "general manager"- making sure that your medical records are kept together, that tests aren't unnecessarily duplicated, and that different specialists aren't unknowingly recommending conflicting treatments or medications. A relationship with a primary care physician can give you peace of mind and save you money, too.
The Behavioral Health Services Program (BHS) provides a state-wide network of Plan-approved providers and a toll-free, 24-hour-a-day telephone access to professional evaluation and referral services. Using BHS means you receive maximum benefits. The BHS program is available to all State Health Benefit Plan Standard and High Option members.
Remember, you must call the BHS program before receiving mental health or substance abuse treatment in order to receive maximum benefits. The number is on your Plan ID card.
Using electronic claim filing when you use the Prescription Drug Program means no claim filing for you and the lowest possible network price on your prescription. Electronic claim filing is available from most Georgia pharmacies. Remember, electronic claim filing can only be used if the State Health Benefit Plan is the primary payer of benefits. (The primary payer is the health plan which pays first if two or more plans pay benefits.)

---------------<48---------------

Standard and High Option participants also can save time and money by using the NurseCall 24 program. Making a doctor's appointment, driving to their offices and then waiting to be seen can take up lots of your time and money. In many cases, once the doctor sees you, you discover that you could have taken care of yourself at home! If only you had known ahead of time. The same holds true when you use an emergency room, except that using an emergency room is even more expensive than using a doctor's office. Of course, going to the doctor or emergency room may be the right place to go, too. The problem is that you just might not be sure what to do.
The NurseCa1l24 program provides just that kind of information so you can make the best decision about the care you receive. You can call NurseCa1l24 tollfree at 1-800-524-7130 anytime of night or day, any day of the week, and reach a registered nurse who is trained to help evaluate your situation and provide the information you need-all in a matter of minutes! Also available free of charge through the NurseCall 24 program are self-care guides, literature and an audiocassette library filled with recordings on hundreds of health topics.
Using the emergency room appropriately can also save you money since the Plan will waive the $50 emergency room deductible under a number of situations. The deductible will be waived if the visit leads to surgery (including setting broken bones) or an admission into the hospital or you are referred to the emergency room by your personal physician or by the NurseCa1l24 program. The $50 emergency room deductible will not apply toward the general deductible or the Plan's stop-loss limits, so it's important to consider all your options before going to the emergency room.
Remember, the final decision on using an emergency room or using some other type of care is yours. And, using the NurseCa1l24 program is totally voluntary. If you feel that your situation is a true emergency, then immediately go to the nearest medical facility, or dial 911 if available.

NEW! BENEFIT CHANGES PROVIDE COST/PREMIUM CONTROL
Annually, the State Health Benefit Plan provides health care coverage for over one-half million Georgians and pays over $1 billion in premiums and claims. That's a lot of money! So the Standard and High Options of the Health Plan have in place a number of programs to save money for both you and the Plan. (The Participating Physicians Program is one example.) Every year these programs save the Plan $150 million dollars. However, despite these savings, the current trends in the cost of care and how often that care is used leave the Health Plan facing financial challenges that have to be addressed. Unless we take action now to reverse these trends, the Health Plan's financial strength will continue to decline.
To address the need for change, the Health Plan hired an independent consulting firm, Coopers and Lybrand (C&L). C&L analyzed the benefit structure and financial condition of the Health Plan and then made several recommendations that would help move us toward the goal of maintaining a high quality, financially sound Health Plan for years to come. The changes listed below, which become effective July 1, 1998, will help to accomplish that goal and keep your premiums affordable:
The High Option $100 deductible will be charged per person for each admission instead ofper calendar year. (There is no change to the Standard Option hospital deductible.)
:Your reimbursement for eligible inpatient hospital expenses will be 80% for the Standard Option and 90% for the High Option. Stop-loss protection for out-of-pocket spending will remain the same. (See table on following page.)
:Your co-payment for approved transplant benefits at non-network centers will increase 10% (from 30% to 40%) in both the Standard and High Options. This increase is for both professional/surgical and hospital expenses.

......... - - - - - - - - - - - - - - _ - - - - - - - - - - - - - - -

COMPARING HEALTH INSURANCE Use this chart to compare the Standard and High Options with any other coverage you may be considering:

STANDARD OPTION

Co-payments

.$100 deductible per person

::::::.and.:deduetibles.:::::::::::::::::,;. for each hospital stay.

-$250 deductible for other expenses

per person/$750 maximum

per family per calendar year.

-$50 emergency room

deductible per visit'

-You pay 20% for covered

hospital expenses and for other

medical expenses.'

HIGH OPTION
.$100 deductible per person for each hospital stay. -$250 deductible for other expenses per person/$750 maximum per family per calendar year. -$50 emergency room deductible per visit' -You pay 10% for covered hospital expenses and for other medical expenses.'

OTHER COVERAGE AVAIIABLE TO YOU

Maximum you pay $1,300 per person/$3,300 per family' :::outofyour.pocket::::::

$500 per person/$1,300 per family'

Routine

Some tests and immunizations

::4'JreventiveA;:.are:::::::::::: covered at 80% up to $100 per year-

no deductible.

Some tests and immunizations covered at 90% up to $100 per yearno deductible.

Behavioral

Hospital fees covered at 90% for

HealthServices. (BHS)::: 60 days after $100 deductible.

Professional fees covered at 80% after

meeting plan deductible.4 Maximum

you payout of your pocket is $2,500

per person. This limit is separate from

the medical maximum shown above.

Hospital fees covered at 90% for 60 days after $100 deductible. Professional fees covered at 80% after meeting plan deductible" Maximum you payout of your pocket $2,500 per person. This limit is separate from the medical maximum shown above.

Not covered except for limited procedures.
::::dlisicHl="t:are:::::::::::::::::: . Not covered.

Not covered except for limited procedures.
Not covered.

Prescriptiondrugs

Covered at 80% after deductible.

Covered at 90% after deductible.

I Emergency room deductible does not apply to general deductible or stop-loss. waived ifadmitted to hospital, surgery performed, or refen'ed by NurseCa1l24 or
your personal physician.
2 Ifyou a1'e admitted to a non-Prudent Buyer Program (PBP) hospital and ifyou do not follow the Medical Certification Program (MCP) guidelines, your benefits
will be reduced. See the State Health Benefit Plan booklet for more details.
3 MCP penalties and uncertified hospital days at non-PBP hospitals do not apply to the out-ofpocket maximums.
4 Total benefits subject to limits (including out-ofpocket maximum) and lower payment levels ifcare is not referred by Behavioral Health Services (BHS) or if
care is provided by non-network providers. See the November 1, 199S SHBP booklet for more information.

.. ---------------~

----------------

Del1tal Insurance

Under the dental options, you may choose single or family coverage in:
The regular dental insurance plan; or
A dental Preferred Provider Organization (PPO), ifyou live in the metropolitan Atlanta, Augusta and Savannah areas, or ifa PPO is
available in your area.
Your cost depends on the option you choose and whether you take single or family coverage. Your premiums for each option are shown on your Option Statement. If you choose the regular dental insurance plan, benefits are determined using the usual, customary, and reasonable (VCR) rates for procedures. These rates are determined by the insurance company. If you choose the PPO, benefits are determined using an allowable fee based on a schedule set by the insurance company. Certain restrictions, and age and frequency limitations apply to both dental options. Read your Dental Summary Plan Document for more information.

LATE ENTRANT LIMITATIONS
Current employees enrolling in the regular insurance option or the PPO for the first time are subject to the Late Entrant Limitations. If you transfer between the dental options, you are not subject to Late Entrant Limitations.
Late Entrant Limitations result in delayed benefits. In other words, you won't receive some benefits until you have participated in the dental plan for a specified period of time. (See the chart on page 37.)
Failure to pay premiums when on leave without pay will also result in Late Entrant Limitations.
New employees are not subject to the Late Entrant Limitations in either option-as long as they enroll when first eligible. If you are a new employee and are interested in dental insurance, sign up now to avoid these limitations in the future. New employees only have a six-month waiting period for Major and Orthodontia (dependents under 19) services.
Ifyou have any questions concerning the regular dental
insurance plan or PPO, call the insurance company, Phoenix Home Life, at 1-800-451-2513.

--------------.->--------------

DENTAL INSURANCE AND PPO OPTIONS COMPARISON CHART

Examples of
-eligible-expenses' .

PREVENTIVE
(TYPE I)
Oral exams Prophylaxis Space main-
tainers for dependents under 14 X-rays

BASIC
(TYPE II)
Fillings Root canals Extractions
(including impacted wisdom teeth) Scaling and root planing Repairs to dentures, bridges and crowns

MAJOR
(TYPE III)
Crowns* Dentures* Bridgework*

ORTHODONTIA (DEPENDENTS
UNDER 19)
Cephalometric X-rays
Treatment study Bands, appliances

None

Individual: $50 Family: Maximum 3 deductibles ($150)

None

.. Pk.insuranceoptionpays. 100%**

80%

50%

50%

.%PPOoptionpays . 100%**

90%

50%

50%

Maximum benefits i(both.options

$1,000 per person each calendar year

$1,500 lifetime benefit**

Waiting period for benefits-new employees enrolling in either option or newly enrolled ...dependents .. ..

None

None

After 6 months continuous coverage

After 6 months continuous coverage

Waiting period for benefits-current employees enrolling for the first time (Late EntrantLimitations)..

None

After 12 months continuous coverage

After
24 months
continuous coverage

After
24 months
continuous coverage

* Ifyou have been covered less than 24 months, crowns, dentures, and bridgework must be at least 10 years old for the plan to cover replacement. Ifyou have
been covered more than 24 months, the plan will cover replacement provided the crowns, dentures, or bridgework are at least five years old. The plan will
cover replacement crowns, dentures, and bridgework ifthe originals are damaged due to accidental bodily injury, regardless ofthe length ofyour coverage or
the age ofthe crowns, dentures, or bridgework (unless you are under the Late Entrant Limitation).
** New, expanded coverage this plan year.

---------------1.,.---------------

SOME IMPORTANT FEATURES OF THE DENTAL OPTIONS
There are some features to keep in mind when you use the dental options (regular insurance or PPO):
Any claim for more than $500 must be reviewed by the insurance company before receiving treatment. You can call 1-800-451-2513 with any claim questions you may have.
The Standard and High Options of the State Health Benefit Plan provide limited coverage for dental treatment. You cannot claim State Health Benefit Plan covered expenses under the dental plan, regardless of the health benefit option you choose. See your State Health Benefit Plan booklet and the Comparison ofCoverage Options booklet for more information.
Extractions, including impacted wisdom teeth, are not covered by the Standard and High Options of the State Health Benefit Plan, but may be covered by an HMO option.
Most dental surgery is not covered by the dental options or the HMO options. See the Comparison ofCoverage Options booklet for more information about HMO coverage or call the HMO directly.
The PPO dentists have agreed to provide quality services at reduced rates. This means you save money if you use a PPO dentist. However, if you enroll in the PPO, receiving dental ca~e from a non-PPO dentist can result in a substantial outof-pocket expense for you. (See the example on page 39.)
Phoenix Home Life uses American Dental Association (ADA) procedure codes, in use at the time of the claim, to pay claims.

EXCLUSIONS LIST These items and services are not covered by the dental options: Charges for sealants, oral hygiene, plaque
control programs, and dietary instruction.
The initial placement offull or partial dentures
or bridges, if the prosthesis includes teeth that
were missing before you were covered by the dental option.
Items covered under the State Health Benefit Plan Standard and High Options (such as periodontal surgery), regardless ofwhether you have this coverage.
See the Dental Summary Plan Document for more information or call toll free 1-800-451-2513.
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------------~c.-------------

EXAMPLE OF DENTAL EXPENSE BENEFIT PAYMENT
This example shows the differences in benefits paid by the regular dental insurance option and the PPO option for the same expense. In addition, it illustrates the advantages of using PPO dentists, if you choose the PPO option.

For the same $500 charge, this employee would pay:
$100 ifcovered under the regular insurance
option;
$35 ifcovered under the PPO and using a
PPO dentist; or
$185 ifcovered under the PPO but using a
non-PPO dentist.

Discounted PPO fee for
PPOt!#ntiit\>
Maximum amount the dentist
t1l11biIJycu:<.. .
Yautoot4it,;;.pClik.e.tf!._tf$~

DENTAL INSURANCE
OPTION
$500
Does Not Apply
$500 x80% $400
$500 $100

PPO OPTION

PPO

NON-PPO

DENTIST

DENTIST

$500

$500

$350 $350 x90% $315

Does Not Apply
$350 x 90% $315

$350

$500

$ 35

$185

- - - - - - - - - - - - - - - - - e ...- - - - - - - - - - - - - - - -

Spen.tingAcCOl.mts

Under the spending account options, you may choose:
Up to $3,000 a year in a health care spending account; and/or
Up to $4,992 a year per family in a child (dependent) care spending account.
Spending accounts are like getting a tax rebate every time you pay for health care and child or other dependent care expenses. This can mean savings of 26%-45%, depending on your tax situation!
Spending accounts are available for two types of expenses: health care and child (dependent) care. Your new spending account reductions begin]une 15. You can use them for eligible expenses incurred during your coverage period. (See the lists on page 41 and 44 for some limitations.)
For additional information, see the booklet
titled Your Spending Accounts available from your
personnel/payroll office.
FOR YOUR INFORMATION

HEALTH EXPENSES ALLOWED BY THE IRS (see IRS Publication 502)

Acupuncture

Lab fees

Alcoholism treatment Laetrile

Ambulance fees
Artificial limbs
Birth control pills
Braille books & magazines
Car controls for handicapped
Chiropractors' fees
Christian Science practitioners' fees

Learning disability tuition
Mental health care (by provider)
Nicotine patches/ Nicotine gum *
Optometrist fees
Orthodontia **
Oxygen Radial Keratatomy

Contact lenses* -Solutions -Enzyme cleaners
Dental fees Doctors' fees Drug addiction
treatment Drugs requiring
a prescription Eyeglasses* Guide dogs Hearing exams
-Aidslbatteries -Repair

Special schools for handicapped
Surgery (cosmetic surgery excluded)
Telephone for deaf
Therapy (medical)
Transplants oforgans
Transportation (only for medical care)
Vision exams (general)
Vitamins*
Wheelchairs
X-rays

Hospital services

Some ofthese expenses are covered by the Standard or High Option or an HMO. For further infOrmation and additional expenses, see IRS Publication 502. It is available at your personnel/payroll office or your local public library or IRS office.
* Must be prescribed. Contact the spending account office for more information.
** Contact the spending account office for more information.
----------------------GJ),....----------------------

HEALTH CARE SPENDING ACCOUNT
The health care spending account helps you save tax dollars on the health-related treatment you and your family receive.
The IRS defines eligible expenses for the health care spending account. These include:
Deductibles and co-payments not paid by any health or dental insurance in which you or any family members participate;
Costs for procedures not covered by a health or dental plan like adult orthodontia and general vlszon exams;
Other IRS-approved expenses.

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UiUiUiU3ii!((())X! ;.;.:.; ;.;. }}}r?rrrriIUrrriIIIIUrrrrrr?i ......:....:..:...:....:....:....:....;:.............,..:.i. . . . ... .. . .. . . . ... . . . . . . . . . . .. . . . . .

EXCLUSIONS LIST These are a few health care expenses not eligible for the health care spending account. (Note: The current issue of IRS Publication 502 may still list some of these expenses as eligible.)
All insurance premiums
'Weight-loss programs Smoking cessation program fees Non-prescribed drugs Postage/handling fees 'Warranties and service agreements Cosmetic surgery Hair transplants
Electrolysis
Teeth whitening/bonding
Long-term care expenses

---------------~>---------------

HOW IT WORKS
Here is how your health care spending account works:
.. You decide how much to put into the account based on expenses you know you will have during the plan year. The minimum is $120 annually ($10 a month); the maximum is $3,000 annually ($250 a month).
.. \Vhen you receive health care or dental treatments during the plan year, you first submit the expenses for reimbursement to any insurance plan which may pay benefits (including a spouse's health and dental plans, or an ex-spouse's plans if these plans cover your children, Champus or Medicare). You must do this even if your expenses only apply toward your deductible.
.. After receiving an Explanation Of Benefits (EOB) from the insurance planes), you attach the EOB showing any expenses not covered or not paid by any insurance plan to a completed medical spending account claim form and submit to your health care spending account.
If your expense is not covered by any insurance plan (for example: prescribed eyeglasses), you can submit a claim form along with an itemized receipt (which includes the actual date of service, the name of the patient, the type of service rendered, the total amount charged, and the complete name, address and telephone number of the service provider) directly to the Flexible Benefits Program.
.. You then receive a reimbursement check from your account for the amount of your approved claimed expense, up to your available coverage (the amount of your elected coverage reduced by any reimbursements already made to you).

YOUR COVERAGE
The health care spending account works very much like insurance. Your "elected coverage" is your monthly contribution times the number of months you are expected to contribute. You can submit claims and receive reimbursement from your account up to the total amount of your "elected coverage" for the plan year.
Other rules affect when your "coverage" ends. If you are terminated or go on an unpaid leave of absence, you will want to see the charts on pages 46 and 61, as well as page 47 for more information.
THE HEALTH CARE SPENDING ACCOUNT

.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CHILD (DEPENDENT) CARE SPENDING ACCOUNT
The child (dependent) care spending account provides you with the opportunity to use tax-free dollars to pay for the care of your children (under age 13) or other IRS-eligible dependents while you and your spouse work (or go to school full time).
The IRS defines eligible expenses for the child (dependent) care spending account.* Generally, child (dependent) care services for any dependent child under age 13 are eligible.* Child care services may include your cost to send a child to preschool, nursery school, or kindergarten, as long as the cost for schooling cannot be separatedfrom the cost for child care. Also, expenses for dependents of any age who are unable to care for themselves because of a physical or mental handicap are eligible. A person qualifying for this type of care must spend at least eight hours a day in your home.**

It \hen you have child or dependent care expenses, you first receive the service, then submit a Child (Dependent) Care Spending Account Claim Form. The form should be signed by the person who provided the care or you should attach a signed itemized receipt. You must provide the care provider's name and complete address.
.. You then receive a reimbursement check for the amount of your approved claim expense, up to your current account balance. Approved expenses that exceed your current account balance are reimbursed as contributions are added to your account.
THE CHILD (DEPENDENT) CARE SPENDING ACCOUNT

If you are married, both you and your spouse must be working or a full-time student during the time the care is received. Your income tax return (long and short forms) will require you to include your dependent care provider's name and tax number or Social Security number.
* Specific rules are found in IRS Publication 503. This publication
is available at your personnel/payroll office or your local public lib10ary or IRS office.
** IRS Publication 504 defines who qualifies as a dependent. This publication is available at your local public library or IRS office.

HOW IT WORKS

Here's how the child (dependent) care spending

account works:

t

.. You decide how much you want to put into your

account. You can put up to $416 per month into

your account. (If you file your income taxes as

"married, filing separately," you can only put

up to $208 per month into your account.)

Your decision also is limited by IRS regulations.

Refer to the limitations on the next page for

more information.

---------------~---------------

THE DEPENDENT CARE TAX CREDIT VERSUS THE CHILD (DEPENDENT) CARE SPENDING ACCOUNT
Your federal income tax rerum allows you to take a tax credit for dependent care expenses. (Georgia does not allow a state dependent care tax credit.)
Generally speaking, the child (dependent) care spending account provides more tax savings than the tax credit. In some cases, the difference is $500 or more. However, families with gross incomes over $24,000 will save more tax dollars with the spending account. You will save tax dollars regardless of whether you use the spending account or the tax credit.
A tax expert and the chart on page 45 can help you determine what is best for your siruation.
Using both the tax credit and the spending account is impractical for many employees. This is because the amount you put in the spending account will be subtracted from the maximum expenses allowed for the tax credit ($2,400 for one child/$4,800 for two or more children). For example, if you have two children and put the full $4,992 a year into the spending account for child care, this is what would happen:

CHILD (DEPENDENT) CARE SPENDING ACCOUNT LIMITS
You may not be able to deposit the full $4,992 if any of the following siruations apply to you:
Ifyour spouse works for the State or another employer who offers a similar plan, the total of your family's contributions to child (dependent) care spending accounts cannot exceed $4,992.
If either you or your spouse earns less than
$5,000 a year, you can deposit as much as the smaller ofyour two incomes.
Ifyour spouse is either a full-time student or
incapable ofselfcare, you may deposit up to $2,400 a year for one dependent, or $4,800 a year for two or more dependents.
Ifyou are married but file a separate federal income tax return, you may deposit a maximum of$2, 500 to your child (dependent) care spending account.
Ifyou are hired after July 1, you may contribute up to $416 per month for the remainder ofthe plan year.

EXCLUSIONS LIST
These are a few dependent care expenses not eligible for the child (dependent) care spending account:

Child support payments

Food, clothing, and entertainment

However, new employees who enroll after July 1, 1998, and who do not contribute $4,800 or more to the spending account may be able to use both the spending account and the tax credit.

Cleaning and cooking services not provided
by the care provider
Overnight camp Activity fees Supplies

Late payment fees

Tran!.ortation to and from the child care
proVl er

Educational expenses
.. Schooling/tuition for school
--------------- ---------------

CHILD (DEPENDENT) CARE: TAX CREDIT OR PRE-TAX SPENDING ACCOUNT?
This chart may help you decide whether to pay dependent care expenses through a tax credit or through your pre-tax spending account.
First, find your income in the left column.
Next, decide whether you will file a marriedljoint, or head ofhousehold return. (Single taxpayers typically file as "head of
household. 'J
Follow across to your number ofdependents and your estimated annual child (dependent) care expenses.
Ifyou find a "T," a tax credit may benefit you the most.
Ifyou find an "S," you may want to pay your child (dependent) care expenses with pre-tax spending account dollars.

Some important considerations to remember: (1) the chart is based on 1998 standard deductions; (2) if you are married and filing jointly, the chart assumes 3 or 4 exemptions; (3) if you file as head of household, the chart assumes 2 or 3 exemptions; (4) the earned income tax credit does not affect the results shown in the chart.
The chart is considered a general guideline only. You should discuss your specific situation with your personal tax advisor before making a decision.

ANNUAL CHILD (DEPENDENT) CARE EXPENSES

ANNUAL FAMILY INCOME AND FILING STATUS

1 DEPENDENT

$2,400/ $46WK

$3,000/ $58WK

MarriediJolnt Head of Household

s

s

s

s

Married!J'oh1t Head of Household

S

s

T

s

'$18;(00)" .
MarriedfJoint Head of Household

S

s

T

s

$20;000::):::"':: .
Married/Joint Head of Household

S

s

T

s

$24;OOO}<
Married/Joint Head of Household

T

s

T

s

.$2.4i()QlmttrJqrg

MarriedlJoint

s

s

Head of Household

s

s

2 DEPENDENTS

$2,400/ $46WK

$3,600/ $69WK

$4,800/ $92 WK

s

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

T

S

S

S

S

S

S

S

S

----------------~----------------

SPENDING ACCOUNT IICALENDAR"

HEALTH CARE SPENDING ACCOUNT
(current employees) July 1,1998 (new employees) First day of month after you have completed a full calendar month of employment

CHILD (DEPENDENT) CARE SPENDING ACCOUNT
Same Same

End of month following last full month of employment or contribution

June 30, 1999

Paycheck
t~MJuttititisblfgitl/

(current employees) June 15, 1998 (new employees) The 15th of the month of the first full calendar month of employment

Same

Paycheck :hiRftittiam:::etfti?:::}},:,:"":""",,,,,, ..

Last paycheck you receive, but no later than May 31, 1999

Same

When eligible
#j(pe~atelrltiJitlfiJ?

Expenses incurred on or after the date coverage begins and on or before the date coverage ends

Same

When eligible expenses can be $t1bhtlttl!dfof..fi6yment&:{
When you have a qualified change in family status and want to change your coverage. See page 22 fcrqWilifyiitgthaiigi#i?

Any eligible expenses incurred during the time you are covered can be submitted for payment during the remainder of the plan year (July 1, 1998-June 30, 1999) and during the grace period ending September 30, 1999
No change is allowed

Same
The first of the month after your first payroll change related to family status

*For additional information, please refe7' to page 47, "Important info771Zation fo7" te771Zinated/retired employees."

NEW EMPLOYEES
If you are hired by the State after July 1, your paycheck reductions for the spending accounts will start the 15th of your first full calendar month of employment.

For example: if you are hired July 8 and sign up for a spending account, reductions will start on August 15. You can begin submitting claims for services that you incur on or after September 1.

lOu may submit claims for services incurred on or after the first of the month after you have completed one full calendar month ofemployment.

EMPLOYEES RETURNING FROM A LEAVE OF ABSENCE

lOur total contributions to each account are prorated by the number ofmonths you participate in these options.

Be sure to consult the booklet titled Your Spending Accounts for information on your spending account contributions and claims.

----------------,~----------------

IMPORTANT INFORMATION FOR TERMINATED/RETIRED EMPLOYEES
If you terminate or retire from State employment during the plan year, your health care spending account coverage ends the end of the month following the last full month of employment or contribution. For example, if you terminate employment on December 31, your last contribution to your health care spending account would be taken from your December 31 paycheck. Your coverage would end January 31 (contributions deducted from your paycheck in one month provide coverage for the following month). Therefore, if you submit a claim for expenses incurred on or after February 1, your claim would not be paid. Coverage may be extended temporarily under COBRA. See Your Spending Accounts booklet for additional information.
IMPORTANT INFORMATION ABOUT HEALTH CARE AND CHILD (DEPENDENT) CARE SPENDING ACCOUNTS
There are some important things to keep in mind when deciding how much money to put into your spending accounts:
.. Spending account reductions from your paycheck begin June 15 for coverage effective July 1.
.. The minimum amount for which you can submit a claim form is $25 (or for any amount at the end of the plan year). Spending account checks are written weekly.
.. To get a check from your account, you will need to submit a claim form plus:
For the health care spending account, an Explanation Of Benefits (EOB) statement from any insurance companies which cover the expense. For expenses not covered by insurance, you must submit an itemized receipt/statement with the date/month/year of service, the type of service, the total charged, name of the patient, and the complete name, address, and phone number of the service provider.
For the child (dependent) care spending account, your provider must sign the claim form or you must submit a signed, itemized receipt with the claim form.

.. You cannot carry over expenses that you have incurred in one plan year into the next plan year for reimbursement purposes.
" You receive a periodic statement four times a year showing how much money you have in each account.
" You cannot carry over money in your accounts into the next plan year. Under IRS rules, any money left in your accounts at the end ofthe plan year (June 30, 1999) and not claimed during the following threemonth grace period is foifeited. It is retained by the plan and used for administrative expenses.
.. You cannot transfer money from one account to another.
.. Reductions for the spending accounts are made every pay period.
.. Your spending account enrollment is binding for the plan year. Certain child (dependent) care account changes are allowed for a limited number of family status changes. (See page 22.) No changes are allowed for the health care spending account.
., A three-month grace period is provided for filing spending account claims. Spending account claims for the 1998-99 Plan Year must be mailed with correct documentation and postmarked on or before September 30, 1999. Claims postmarked after September 30 will not be paid.
A WORD ABOUT FORFEITURES
By putting money into your spending accounts, you can save 26%-45% in taxes for these expenses. Many employees say they don't use the spending accounts because they are afraid of forfeiting money. However, few employees actually do. In 1996-97, only 23% of those participating forfeited money in the spending accounts. The average amount of forfeitures per participant was $33.

---------------~---------------

LOllg~'1erlll Care ]hsurance

Long-term care refers to a wide range of personal care, health and social services for people of all ages who suffer a chronic disease or long-lasting disability. These services can be provided in a nursing facility, an adult day care center or at home, and can involve some nursmg care.
It's important to know that long-term care is not just nursing home care. And it's not just for the elderly, although as people age they become more likely to need this type of care. More often than not, this kind of care, often called "custodial care," provides help with the normal activities of daily living-such as walking or dressing, household activities like meal preparation or chores, or a variety of homeadministered health care services.
The cost for this kind of care is very high. Home care can be as much as $20,000 per year, and nursing home care can range in cost from $20,000 to $60,000 annually.
Generally, you pay these expenses out of your own pocket, because medical insurance and Medicare do not cover long-term care.
Only when your financial resources are gone do you become eligible for Medicaid. Long-term care insurance is designed to protect you financially by paying benefits if you do need long-term care. It also helps you maintain greater independence and a higher quality of life.

WHEN ARE BENEFITS PAID First, you or a covered family member must have an eligible physical or cognitive disability. If the disability creates a need for you to receive continual help from another person to carry out any three of the following six activities of daily living: eating, dressing, bathing, using the toilet, continence, or transferring from a bed to a chair, you qualify for benefits. Benefits begin after a 90-day waiting period.
Ifyou have questions concerning how the long-term care
insurance works, call 1-800-227-4165.
WHO CAN BE COVERED The plan is being offered to:
:You;
:Your spouse;
:Your parents; or
:Your parents-in-law.
"Parents" are biological (natural), adoptive, or stepparents of eligible employees or spouses. You and your spouse combined may cover up to a total of four parents. Your spouse, parents and parents-in-law will have to complete a Medical Underwriting process and be approved in order to be accepted for longterm care coverage.

The price for coverage is based on the age of the enrollee as of April 1, 1998, or date of hire, whichever is later.

---------------~---------------

YOUR LONG-TERM CARE OPTIONS
You can choose from one of three daily benefit levels and the corresponding monthly premium that is right for your needs and budget. You can add on a reduced paid-up option and/or an inflation protection option. There are also choices as to where you can receive your care when you qualify for benefits-home care, adult day care, and nursing facility care. The amount of the benefit depends on two factors: where the long-term care is provided and the level of coverage you have selected.
VVith any of these daily benefit options, the plan pays benefits to a benefit-eligible person on a monthly basis. The monthly benefit is equal to 100% of your elected amount, if your care is provided in a statelicensed nursing home facility, and 60% of your elected amount, if your care is provided in an assisted living facility or a home.
YOUR PREMIUMS
You pay for your long-term care coverage through the convenience of payroll deduction with after-tax dollars. Your monthly premiums for coverage appear on your Option Statement. Premium costs are based on your age as of the Benefit Calculation Date or date of hire (whichever is later). Your family members' premiums are based on their age as of their effective date of coverage, and their premiums will be submitted directly to UNUM (not payroll deducted).

LONG-TERM CARE FACTS
Did you know that:
Nearly halfofall Americans over age 65 require long-term care for some period oftime.
Medical insurance and Medicare generally do not cover long-term care.
Many Americans will spend their life savings on less than one year ofcare.
Medicaid covers some types oflong-term care, but restricts your choices ofwhere this care can be provided.
IN THE FUTURE The long-term care plan can play an important part in your future. Coverage will stay in effect for as long as you continue to pay the monthly premium, even if you should leave the State's employment. You could then apply for coverage continuation and be billed by UNUM directly at your home.
Remember, the opportunity to enroll is also offered to your spouse, your parents and your parents-in-law on a direct payment basis. If these relatives are interested in learning more, request an Enrollment Kit from UNUM at 1-800-227-4165.

OPTIONS

NURSING FACILITY

HOME CARE/ ASSISTED LIVING FACILITY/
ADULT DAY CARE

$75..................... ... .. $60

$45

---------------~---------------

FOR YOUR INFORMATION ' .r;hanges to the administrative structure that allow for greater participant access and enhanced
piittiqipmu S&r:.4fes.

401 (k) Plan. Most State employees can now choose to
participate in a 401(k) plan if they prefer that to the current Section 457 Plan which will continue in force. A 401(k) plan may be more attractive to some employees for a variety of reasons, including its increased portability over the Section 457 Plan.

July 1, 1998 marks some exciting changes to the State's Deferred Compensation Program, changes that benefit all current and eligible Plan participants.
Current Plan participants and those State employees who are eligible to participate should familiarize themselves with these changes so they can take full advantage of the increased flexibility, improved service options, and new opportunities these changes offer.
These enhancements are designed to increase employees' understanding of the importance of accumulating supplemental retirement savings, make it as easy as possible for eligible employees to participate, and give all participants the easiest access and most direct and immediate control over their investments possible.
AN OVERVIEW OF THE CHANGES
After a year of in-depth study and analysis of the current Deferred Compensation Plan, including input from both participants and non-participants, the State Personnel Board and the Employee Benefit Plan Council approved changes to the Deferred Compensation Program in three major areas:
The addition ofa 401 (k) Plan option,

New Investment Options. After a comprehensive review of available funds, the State selected a new roster of funds that are among the highest performers in their respective asset classes.
Model Portfolio Options. For those who would like to participate in a Deferred Compensation Plan but do not feel up to the sometimes daunting task of sorting through all the information to make wise choices in funds, there are now three ready-mixed Model Portfolios from which participants can choose according to their investment goals and risk tolerance-conservative growth, moderate growth, or aggressive growth.
Enhanced Participant Services. The State has contracted with Great West Life & Annuity Insurance Company to serve as the Third Party Administrator (TPA) to handle both account recordkeeping and participant services. Great West provides Interactive Voice Response (touch-tone telephone menus) as well as personal attention from service representatives as needed. This change enhances the delivery of fast, accurate and timely information to employees regarding the status of their accounts, allows participants to make much more timely changes to their accounts, and provides prompt and professional personal attention where needed.

A change in the line-up ofinvestment fund choices, and

- - - - - - - - - - - - - - - - -. . .e - - - - - - - - - - - - - - - - - -

Internet Access. Employees will now have on-line access to their account information via a web site that also includes several interactive analytical tools (questionnaires) to help the participant develop an appropriate investment strategy for his or her future. Eventually participants will also be able to make investment changes (fund transfers or re-allocations of ongoing deferral investments) on the website.
Account Fees. In the past, quarterly account maintenance fees (as required by state law) have been levied on each investment option (fund) balance within a Plan ($3 per quarter per fund balance), but the new account maintenance fees are levied per overall Plan Account ($6 per quarter per Plan account). This means that accounts with a number of different funds are not penalized for their investment diversification.
Retirement Education and Counseling. The State Deferred Compensation Program continues its commitment to providing ongoing education and retirement counseling to State employees, and with the shift in administrative responsibilities to the Third Party Administrator can increase these services to employees.
The following pages describe the State Deferred Compensation Program in more detail, including the new changes.

HOW DO THE TWO PLANS COMPARE?
Up until July 1, 1998, eligible State employees could enroll only in the Section 457 Plan authorized by Congress for State employees. The new 40 1(k) Plan available July 1, 1998, however, offers another choice, including added flexibility in its rollover features and other elements that will be of interest to some participants.
The following table is meant as an overview comparison of both Plans. For complete and detailed information, contact your local personneVbenefitipayroll representatives or the Deferred Compensation Program office toll-free at 1-800-746-3682.

WHAT IS A DEFERRED COMPENSATION PLAN?
Deferred compensation plans are regulated by Congress. They allow eligible employees to put aside a portion of their income before State or Federal taxes are deducted (not including Social Security taxes). As a rule, taxes are not paid on either the employee's. contributions to the Plan, or any revenues or dividends
that the investments generate until the monies are <{f
withdrawn from the Plan.
The intent is to allow workers to build financial security-especially for retirement-above and beyond what their basic pension or retirement plans may offer. Pensions and retirement plans are often based on a "one size fits all" approach which may not meet individual needs all that well. Deferred compensation plans are an excellent and smart way individuals can help make sure their futures are secure and retirement years comfortable.

... - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SECTION 457 PLAN
All State employees whether full-time or part-time. *

401(k) PLAN
Employees in permanent, full-time positions, and part-time or temporary employees working 1,000 hours or more per year.

RolloversrRolldns

Initial enrollment for eligible employees is available Initial enrollment for eligible employees is available

at any time.

any time starting July 1, 1998.

Not allowed.

Employees can roll in funds from a retirement plan of a previous employer. Employees can also rollover funds into the 401(k) even if they do not choose to make current deferrals to that Plan.

PlanDeferrals"

Except for 1998, participants can defer to only one Plan during any calendar year. Participants who switch from the 457 Plan to the 401(k) Plan will have account balances in both plans thereafter.

Maximum Annual DeferraLAmounts

25% of taxable State compensation or $8,000 per year, whichever is less.

10% of gross pay per year or $10,000 for 1998, whichever is less.**

Changes to
Current Deferral Amounts",',"""""'''' '

Deferral can be started or stopped and deferral amounts changed (within the same Plan) any time, up to four times per year. Changes become effective the calendar month after processing and approval.

Catch~up.DeferraI5

$15,000 per year for three years. Employees have a one-time opportunity, over a three-year period just prior to their projected "full retirement benefit date" (under their applicable basic retirement plan), to make up some or all of the difference between what they actually contributed and what they could have contributed. For three years prior to the calendar year of their "full retirement benefit date" they can make deferrals up to a total of $15,000 per year (including the $8,000 maximum for the current year). In other words, if an employee's maximum
for this year is $8,000, he or she can make additional
deferrals of up to $7,000 per year for each of these three years. If the employee's maximum is less than $8,000, he or she can add additional deferrals of more than $7,000 for that year, but no more than $15,000 total.

None.

Employer Contributions'

None.

None.***

* Except new hires ofthe Community Sa7Jice Boards
** Howeve1; ifan employee has deferred salmy into a 457 Plan and then switches to the 401 (k) Plan in July, 1998, the lower $8,000 maximum annual defaral applies.
*** With the exception ofthose Community Service Board employees not eligible fir the Employees' Retirement System cove1'age.

-------------------;e---------------

SECTION 457 PLAN

401(k) PLAN

Changing Plans (far CurrentDeferrals .

Anyone currently participating in the 457 Plan can change to the 401 (k) effective July 1, 1998. Thereafter, participants can switch to or from the 457 Plan during the November Change Period for the following full calendar year.

Current 457 Plan participants can switch to the 401 (k) Plan for the remainder of 1998 effective July 1, 1998. Thereafter, participants can switch to or from the 401 (k) Plan only during the November Change Period for the following full calendar year.

Account8alances..

Account balances cannot be moved from one Plan to the other, since the Section 457 Plan does not allow rollovers. However, while participants can only defer to one Plan during a calendar year (except for 1998 - see previous item), employees who participated in both Plans at different times will have account balances in both Plans.

Deferral Investment Changes .. .

Changes in investment fund choices for ongoing salary deferrals can be made at any time during the year. The new systems greatly enhance employees' access and ability to make timely deferral investment changes.

Investment Balance ..Transfers... ...

Partial or complete transfer (exchange) of current investment value from one Plan investment fund to another can now be initiated at any time using the Great West toll-free number or, eventually, the website.

.PayaufRules ..>

Initial payout date and method of payout must be elected at termination. However, initial payout date can be changed to a later date once in a lifetime (before payout begins) and payout method can be changed at any time before payout begins. Once payout begins, it must continue uninterrupted until complete.

Payouts can start or stop anytime after age 59-1/2 and prior to age 70-1/2. Payout method can be changed any time prior to age 70-1/2.

Always taxed as ordinary income at regular wage Usually taxed at 20% flat Federal withholding rate

withholding rates.

if not rolled over into another qualified plan.

Rallavers:RaIIOuts....> Not allowed.

Employees who terminate employment with the State can roll out their 401 (k) Plan balances to IRAs or other qualified retirement plans without current taxation.

Penalties far Early Withdrawals>

None-subject only to State and Federal income tax.

State and federal taxes if withdrawn plus 10% penalty before age 59-1/2 (even if for financial hardship or qualifying termination) and not rolled over to another qualified retirement plan.

Hardship Withdrawals

Must meet strict "unforeseeable emergency" test based on IRS rules for a qualifying event.

Must meet general "heavy financial burden" test. Approved hardship withdrawals preclude any active deferrals for at least 12 months following payout and reduce the maximum deferral for the following year by the same amount as the total hardship withdrawal.

---------------148---------------

ENROLLING IN A DEFERRED COMPENSATION PLAN Those eligible for either Plan (see previous table) but not currently participating can enroll in the Section 457 Plan at any time, or the 401(10 Plan any time after July 1, 1998.
Current 457 Plan participants can switch current contributions to the 401 (k) Plan effective July 1, 1998. Thereafter, participants in either Plan can switch to the other Plan for the following calendar year during the current year's November Change Period.
To enroll, the eligible participant must: Read the prospectus for each fund choice
Fill out and sign the Participation Agreement
Fill out and sign the Beneficiary Form
Spousal VVaiver Form (401 (k) only)

Even though the final choice must be yours, remember that the State Deferred Compensation Program is here to help by offering education and counseling services, written materials, participant services via the Third Party Administrator (TPA), and some very helpful information and tools through the new website. All the changes in the Deferred Compensation Program are designed to enhance service to participants.
CHOOSING INVESTMENT OPTIONS (DEFERRAL ALLOCATIONS)
The first step in making any decision should be to determine where you are now and where you need to be by retirement age. The new website offers two tools to help you determine (estimate) both what you will need for retirement, and how your current retirement and other investments are likely to have performed by the time you retire. As you take advantage of all the information and help available, you should be able to craft an investment strategy and make other informed decisions that will serve you well in the future.

The forms should be available from your local personnelJpayroll office. Your contributions (deferrals) can begin the calendar month after your forms are approved and processed.

NOW-TWO APPROACHES TO MANAGING INVESTMENT OF PLAN CONTRIBUTIONS

Input from Plan participants and non-participants alike

CHOOSING A DEFERRED COMPENSATION PLAN

revealed that many of you find the current process too complicated and intimidating, and wish there were a simpler approach to managing your supplemental

Obviously there are definite differences between the

retirement investments. Now participants have two

two Deferred Compensation Plans offered, and each

different avenues for making investment selections,

offers features that would benefit some people more

one offering a greatly simplified method of choosing

than others. The importance of making a well-

investments and the other offering the pick-and-choose

informed decision as to which Plan to choose is high-

approach employees have enjoyed in the past.

lighted by the fact that once you choose one Plan over

the other, you are limited to making deferrals to that

Traditional Pick-and-Choose Approach

Plan for the remainder of 1998, though you can switch to Investing (New Investment Options Lineup)

to making deferrals to the other Plan for 1999 (and each successive year) during the November Change Period.

Participants can continue to make specific customized fund selections among investment funds covering eight

different asset classes or fund types. This approach

It is possible, of course, to carry account balances in

gives a participant the most "hands on" control and

both Plans. The limitations on one Plan at a time

flexibility to adjust investment holdings, but requires

refer only to your current deferrals. Also please note

more continued involvement and monitoring of

that Federal law does not permit transfer of a 457 Plan investment performance and risk exposure. A new

account balance into a 401(k) Plan account, or vice

lineup of fund products is being made available

versa. Thus, if you now have a 457 Plan balance and

because analysis during the past year indicated that

begin making deductions into the 401(k) Plan, you will while the Plan's existing investment options continued

have to maintain accounts in both Plans until each has to perform well, there are other funds that have

been fully paid out to you, with each account subject

proven to be even more consistent performers in

.. to the quarterly administrative fee.

their asset classes.

--------------- .---------------

New Model PortfoliosA Simplified Approach to Investing
Participants can now simply identify which of three levels of market risk/investment growth potential they are most comfortable with (consistent with their estimated retirement income needs), then choose to have their deferrals allocated to the matching diversified Model Portfolio which has been designed for that same risk exposure level (either conservative growth, moderate growth or aggressive growth investment

goals.) Each portfolio allocates deferral dollars by a different fixed percentage formula into the specific plan-sponsored funds occupying several different asset classes, thus providing automatic diversification across asset classes. Furthermore, the portfolios are rebalanced quarterly to maintain their asset class allocation targets. The pie charts below illustrate the fixed asset class allocations to be applied to each portfolio.

CONSERVATIVE GROWTH PORTFOLIO

M'ldaILrge Cap Value
15%

Growth SmllMid Cap Intemtl.

& 15n%come

Agg. Growth
)-01 10

Equity 5%

Large Cap Growth (Index)
20%

Fixed Income Option 50%

MODERATE GROWTH PORTFOLIO

Intemational Equity 10%

Fixed Income Option 30%

Growth & Income
10%

Lg. Cap Growth (4ctive)
25%

AGGRESSIVE GROWTH PORTFOLIO

International Equity 20%

Fixed Income Option 10%

SmllMidCap Agg. Growth
20%

Lg. Cap Growth (4ctive)
20%

Growth &income
20%

--------------'4B--------------

The following table shows both the new and old investment choices for each fund type (or asset class), and the percentage makeup of the three Model Portfolios:

Equity
International

United International Growth

Delaware Pooled Int'l Equity

5

10 20

* C = COllsl?rvative Growth (lower risk) M = Moderate Growth (moderate 1?sk) A =Aggressive Growth (higher 1?sk)

----------------4D..-----------------

REQUIRED RE-ALLOCATIONS FOR CURRENT DEFERRALS
Since most of the old funds are being replaced with new fund options, current Plan participants must choose new investment allocations for their current deferrals from either the new product lineup or by selection of a Model Portfolio prior to July 1, 1998. Current deferrals for participants who do not make these investment transfers by July 1 will be allocated into the Fixed Income Option fund until participants choose other investment options.
REQUIRED RE-ALLOCATIONS FOR PREVIOUSLY INVESTED ACCOUNT BALANCES
Participants with balances in the old funds must make new choices for those balances by July 1, 1999. The new choices can be made by executing one or more specific transfer requests, or by using an automated dollar cost averaging "installment" transfer over the year grace period. There are several options, the details of which are available on the website or from Great West service representatives. Account balances for any participants who do not make these investment transfers by July 1, 1999, will be allocated into the Fixed Income Option fund until participants choose other investment options.

MAKING OTHER CHANGES TO YOUR PLAN
Even though you must stay in your chosen Plan for the entire calendar year (or for the remainder of 1998 for those choosing a new Plan effective July 1 or enrolling for the first time in 1998), all other changes, such as changes in your investment options (investment transfers), changes in beneficiaries, changes in amounts deferred (deducted from your paycheck) within the current Plan can be made at any time during the year by either calling Great West, accessing the website, or visiting your local personnel/payroll office (see the table on page 58 for details on who to contact for which service or information need.)
One of the most exciting aspects of the changes in the Deferred Compensation Program and its administrative structure is that participants will now be able to make investment changes (within the current Plan) at any time-24 hours a day through the Great West Interactive Voice Unit, or 5 days a week during business hours through Great West service personnel, or (eventually) 24 hours a day through the website. Previously, participants could only make up to three reallocations per month through their personnel! payroll/benefits office, and there was a significant delay before the re-allocations could be executed. With the new systems, changes made before 4 p.m. Eastern time will be executed the following day at the previous day's closing market prices.

... - - - - - - - - - - - - - - - - _ - - - - - - - - - - - - - - -

CHA1'JGE OR INFOR;VIATION NEEDED
..EnroILinaPlan.:
.. C h a n g e B e n e f i c i a r i e s . :

WHO TO SEE OR CONTACT
Local personnel/payroll/benefits staff
Local personnel/payroll/benefits staff in November of each year for the following calendar year (However, current 457 Plan participants can elect to change to the new 401 (k) Plan effective July 1, 1998 for the remainder of 1998.)
Local personnel/payroll/benefits staff

Startorsfopdeferrals Local personnel/payroll/benefits staff

..Change.deferralamounts

Local personnel/payroll/benefits staff

Current deferral investment transfers J . .... ,~e .:,vAchanges. ).....

Local personnel/payroll/benefits staff (by July 1, 1998 because of new investment options; thereafter, at any time with Great West Interactive Voice Unit or service representatives; eventually available on the website

Account balance investmenttransfers.(exchangesJ>

Local personnel/payroll/benefits staff by July 1, 1999 because of new investment options; thereafter, at any time with Great West Interactive Phone Menu or service representatives; eventually available on the website

Get Account Status :dnformation::::::::.:::: ..

Website, Interactive Phone Menu or Great West service representatives

Deferred Compensation Program Office or Great West

.:Rolloverto orfrom 401(k)

Deferred Compensation Program Office or Great West

:OtherquestionS:::::: ..

Deferred Compensation Program Office

ENHANCED PARTICIPANT SERVICES
Every effort has been made to make the Deferred Compensation Program as accessible to participants and eligible employees as possible. In addition to ongoing counseling and education efforts by the Deferred Compensation Program staff in state-wide meetings and other appropriate venues, three new components offer you nearly instant information and assistance:

TVebsite-www.g;ms.state.ga.usldeferred The Plans enter the Internet Age-new website allows you to make changes in your account options (investment choices), view the status of your account, request prospectuses or plan publications, and use on-line assessment and evaluation tools designed to help you understand more about your personal financial situation and future needs so you can invest more wisely.

1-800-701-8255 (Great TVest
"Key Talk"-after July 1, 1998)
Telephone Investment Transfers An 800 number with both a touch-tone menu-driven voice response service available 24 hours a day, and live benefits personnel available 9 - 5 Eastern time, if needed. \Vith either resource, you can place sameday investment transfer requests (requests entered after 4:00 p.m. will execute at the next business day's share prices). These services are provided by Great

Interactive Kiosks If you work in or near a number of larger State facilities, you will be able to get the same kinds of interactive, on-line account information and planning tools as are available through the website, even if you don't have Internet access at home or on the job. Free-standing "Deferred Comp to Go" kiosks will be installed in public-access areas of these sites to let you quickly check your account balance, transfer plan value between funds, or complete other Plan-related tasks.

West, the State's Third Party Administrator (TPA).

If you have additional questions, see your local

personnelJpayrolllbenefits staff or contact the

Deferred Compensation Program Office toll-free

at 1-800-746-3682.

--------------_.~---------------

Additional Inforrnation
This section gives you some smart tips about the future effects of your benefit choices, plus additional sources of information to help you make your decisions. PRE-TAX PREMIUMS HELP YOU STRETCH YOUR DOLLARS The Flexible Benefits Program allows you to save on taxes while you pay for your benefits. Pre-tax premiums reduce your taxable pay...and your taxes. Here is how pre-tax premiums work. Through the Flexible Benefits Program, premiums for most of your insurance options, health benefit options, and contributions to your spending accounts are deducted from your paycheck beftre federal and state income taxes and Social Security (FICA) taxes are withheld. That means your taxable pay is lower...and so are your taxes. It also means you have more in your paycheck or more to spend on benefits than you would if you paid the same premiums with after-tax dollars.
----------------<~---------------

A FEW WORDS ABOUT PRE-TAX PREMIUMS
Using pre-tax premiums will not affect other employee benefits that are based on pay-any State of Georgia retirement system, life insurance, disability, and pension benefits. Those benefits will be based on your full pay before pre-tax premiums are made.

(See chart below. This example assumes pay of $25,000 and annual pre-tax premiums of $2,500 until age 65.)

However, pre-tax premiums could reduce the maximum deferral available under the 457 Deferred Compensation Plan, if you earn less than $32,000 and you are trying to save the maximum amount allowed by the Plan.

You won't pay Social Security taxes (FICA) on your pre-tax premiums. This may reduce your future Social Security benefits although any reduction will be minimal in comparison with your total Social Security benefits.

PRE-TAX PREMIUMS: AN EXAMPLE

WITH AFTER-TAX PREMIUMS

\VITH PRE-TAX PREMIUMS

AnnuaJpay'" Annuaipre"taxpremiums'" .Taxable.pay',','",,,, Income. andFICA taxes',',',"''''''''''
Annual.after~taxpremiums"",',,,.'
Take"home.pay',',',,,,,

$25,000
$25,000 - 4,026 - 1,800 $19,174

$25,000 - 1,800 $23,200 - 3,510
$19,690

With pre-tax premiums, this employee saves $516 in taxes, and has $516 more to spend on other benefits ...or to take home. Pre-tax premiums are available only for the statewide benefits* offered through the Flexible Benefits Program; they are not available for other agency-sponsored benefits. This example assumes a married employee filing a joint return and claiming four exemptions.
* Pre-tax premiums are not available for sh071;-term disability benefits, dependent life, legal, 07-long-term carT insurance.

-----------------CDr-----------------

IF YOU LEAVE STATE EMPLOYMENT
If you leave State employment, you can continue some of your Flexible Benefits Program choices.
lOu may be eligible to continue your medical and/or dental coverage and health care spending account for you and eligible family members after your last day ofemployment.
A conversion or portability feature may apply to your life insurance, dependent life insurance, and/or AD&D coverage.

Legal insurance can be direct-billed to you for the remainder ofthe plan year in which you leave State employment.
Long-term care insurance can be direct-billed to you as long as UNUM extends coverage to you.
Be sure to review each Summary Plan Document and see your personnel/payroll office for more information.

TAKING COVERAGE WITH YOU WHEN YOU LEAVE

BENEFIT

RETIREE COVERAGE AVAILABLE THROUGH RETIREMENT PLAN BENEFIT DEDUCTIONS

COVERAGE CAN
BE CONTI1'I<'.JED
THROUGH COBRA

COVERAGE CAL~ BE DIRECT BILLED BY CARRIER OR CONVERTED TO A..l\l INDIVIDUAL POLICY

YOU MUST DECIDE MTI COMPLETE FORMS WITHIN

State Health

BenefifPlao

Yes

Dental

"""Coverage"",,,,

Yes

Yes

Yes

60 days

Yes

No

60 days (COBRA)

Prior to retire-

ment (retiree

coverage)

Health

Care Spending

",,:,Account",',, ..

No

Yes

No

60 days

Dependent

Care Spending

""",Account,',',,

No

No

No

Life/

Dependent Life

""dnsurance','"",,,

No

No

Yes

31 days

AD&Dlnsurance

No

No

Yes

31 days

Short-Term,

Long-Term

Disability

"dnsurance>/ .

No

">Legallnsurance,,,,,

No

No

No

No

Yes

31 days

Long-Term Care

""dnsuraoc:e,,',',,

No

No

Yes

31 days

.. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

OTHER INFORMATION ABOUT YOUR BENEFITS
Publications in blue are available for viewing at your personnel/payroll office. A copy of publications in orange is available to you from the personnel/payroll office (unless indicated otherwise).

State Health Benefit Plan Plan booklet (last publication
November 1, 1995) UPDATER: Spring/Summer 1998,
October 1997, Spring/Summer 1997, April 1996 Comparison of benefits package including a list of participating health care providers H1WO lWember Handbook Additional information about each HJ\10 available from HJ\10s

:Oental Coverage -}l>.lan booklet
.j'!t.of PPO dentists-Request from )nix Home Life (1-800-451-2513)
;;. ".

ending Account

t



';;;, .ilS 502 and 503

.:;:}:-.

Depende Plan boS IRS Publi~;;

Life Insurance Plan booklet
Dependent Life Insurance Plan booklet
AD&D Insurance Plan booklet
Short-Tenn Disability Insurance Plan booklet Summary of State sick leave policy
Long-Tenn Disability Insurance Plan booklet Plan booklet for the State Retirement
System Plan booklet for your retirement system
Legal Insurance Plan booklet
Long-Tenn Care Insurance Enrollment kit-Request from UNUM
(1-800-227 -4165)
Deferred Compensation Plan booklet

.. - - - - - - - - - - - - - ~------------

Index

A

E

Accidental death and dismemberment

- Coverage amount

.17,25

After-tax premiums

.24-27, 31,48-49, 59

Attorneys

29-30

B
Behavioral Health Services (BHS) Beneficiary Benefit Calculation Date Benefit Salary Blood test

.3 3, 35 20-21,24-25,54 .5 .5, 6, 24-27 .18, 19

Eligible expenses/services

.30, 35,37,40-45

Emergency room deductible

.34, 35

Evidence of Insurability

.18-20

Examples

- Dental

.39

- Dependent care tax credit

44-45

- Pre-tax premiums

60

Excluded expenses/services

- Child (dependent) care

spending account

44

- Dental

.38

- Health care spending account . .41

- Legal

.31

c

Calendar

5,46

Care provider

.43, 47

Changes

- Deferred Compensation Plan . .1,21, 50-58

- Flexible Benefits Program .1, 3-4,26-27,61

- State Health Benefit Plan

.1, 32-35

Child (dependent) care spending account

- Coverage amounts

.40,43-44

- Vs. tax credit

44-45

Claim forms

.30,42-43,47

Confirmation Statement

.5,22

D
Deferred Compensation Plan Dental coverage
- Coverage amount - Expenses - Limitations - Options -PPO Dependent care tax credit Dependent, definition Dependent life insurance - Coverage amounts Disability retirement Drugs

.1, 17,21,50-58
.3 6-37 .36-39 .36-38 .3 6-39 .36-39 44-45 25,43
25 26-28 .33, 35,41

F

Family status change

22,46-47

Forfeited contributions,

spending accounts

.47

Forms

- Beneficiary Election

20-21,24

- Deferred Compensation

21

-Health

21

- Life insurance

.18

- Long-term care

20

- Short- and long-term disability 20

H

Health care spending account

- Coverage amounts

.40, 42

Health Maintenance Organizations

(HMOs)

.1,21-22,32-33,

........................... .40,62

High Option

.1,22,32-35,38,40

I

Immunizations

35

Imputed income

24

Internal Revenue Service (IRS)

.16,22,27,

........................... .30,41,43,47

Investing information

.50-58

---------------~._--------------

L
Late Entrant Limitations Lawyers Legal insurance Life insurance
- Coverage amounts - Evidence of Insurability Long-term care insurance Long-term disability - Coverage amounts - Evidence of Insurability

.36-37 6,29-31 .17, 29-31, 61
19, 24-25 .19 17, 48-49, 61
27 20

M

Married, filing separately Medical Certification Program ., Medical Underwriting Requirements
- Disability - Life/dependentlife - Long-term care Minimums, spending accounts

.43 .3 5
20, 26, 27 .19,24-25 20, 49 .42-43,47

R

Restrictions

22, 26-27, 31,

........................... .36-38,41,44

Retirement, disability

27-28

s

Short-term disability

- Coverage amounts

.26

- Evidence of Insurability

20

Social Security

26-27,59-60

Spending accounts, coverage amounts . .17, 40, 42-44

Spouse

- Dependentlife insurance

25

- Examples

60

- Has health coverage

.16

- Long-term care

.48

- Works for the State

7, 17, 44

Standard Option

.1,22,32-35,38,40

State Health Benefit Plan,

coverage amounts

.32, 35

N

T

Network attorneys Newemployees Nonduplication of benefits NurseCa1l24

29 .16, 19,21,22,46 .16 .34

o

Open Enrollment

5,21-22,33

Option Statement

.1,5-6,8-15,18-22

.............................. .26-27, 32, 36,49

Orthodontia

.36-37,40

p

Taxes

24, 26, 27,31,33,

........................... .38,40-41,43-45,



.47-49, 59-60

Terminated/retired employees

27-28,47,61

Toll-free telephone numbers

18, 20, 24, 27



29, 32, 36, 38,



.48-49, 51, 58

Total disability

25-27,48

w
Waiting periods

.16,22,26,37, .46,48

Parents, long-term care

.48

Participating Physician Program

.3 3

Permanent disability

25,28

Pre-existing conditions

.16,26

Pre-tax premiums

24,27,59-60

Preferred Provider Organization (PPO) 36-39,62

Prescription drugs

.33, 35,40

- Rx electronic claim

.3 3

Preventive care benefits, dental

.3 5

Preventive LegalCare Office (PLCO) ..29-30

---------------ca---------------

o Compare your Option Statement to your
Confirmation Statement.
o Review your Option Statement and your "You
Decide!" enrollment booklet to determine if you need Medical Underwriting Forms. If forms are needed, ask your PersonneI!Payroll office for the appropriate Medical Underwriting Forms:
Life Insurance - UNUM Evidence
of Insurability Form
Dependent Life Insurance - UNUM
Evidence of Insurability Form
Disability Insurance - UNUM Evidence of Insurability Form
o If forms are needed for the State Health Benefit
Plan as indicated on your Option Statement and in the "You Decide!" enrollment booklet, ask your PersonnelJPayroll office about these forms (you may need one or more):
Changing Options from "No Coverage" or "Single" to "Family" - Dependent and Miscellaneous Update Form
Changing to "No Coverage"-
Discontinuation of Health Benefit Coverage Form

Choosing "No Coverage" as a New Employee - Declination of Health Benefit Coverage Form
Enrolling as aNew Employee for any health option - Membership Form
Enrolling or changing to an HMOEnrollment Supplement for Health Maintenance Organizations; HMO Residence Requirement Waiver Form
o Compare the deductions/reductions on your
pay stubs against the options selected on your Confirmation Statement and Option Statement.
o Notify your PersonnelJPayroll office immediately
if there are any errors.
o Follow-up: Make sure corrections are made.
REMINDERS:
If enrolled, have you completed or updated
your Flexible Benefits Program Beneficiary Election Form for the Life and Accidental Death options?
Remember, there are deadlines to submit your Option Statement and the appropriate forms!

This booklet summarizes the benefits you can choose through the State of Georgia Flexible Benefits Program. A more detailed explanation of benefit provisions is provided in the individual benefit plan documents. Every attempt has been made to ensure that the information in this booklet is accurate.
This Program is governed by legal documents and insurance conttacts. If there is any difference between this description and the official documents and contracts, the documents and contracts will determine your benefits. The Flexible Benefits Program is governed by current tax law and is subject to and operated in accordance with the regulations of the Internal Revenue Service (IRS). If changes in the Program are necessary to comply with the law or IRS regulations, you will be notified.
The State reserves the right to change or terminate any of the benefit plans offered under the Flexible Benefits Program as allowed by law.
105k-$92,500.00 -4/98