HUMAN RESOURCES DEPARTMENT

MEMORANDUM

TO: Potential Retirees of the Town of Cary

FROM: Dale Johnson, Employee Benefits Manager

SUBJECT: Benefits Available to Retirees

Note: In order to be eligible for the following benefits, an employee has to submit a valid application for retirement with the NC Retirement System (service or disability) while still considered an active employee of the Town of Cary. Persons who leave employment with the Town and apply for retirement with the NC Retirement System at a date following active employment status with the Town are not considered retirees of the Town of Cary.

MEDICAL INSURANCE - Eligible retirees who are under age 65 can continue their individual medical insurance with the group plan being currently offered to active employees. Any eligible dependents (spouse or children) can also remain on the group plan until the retiree reaches age 65 and as long as the spouse and/or child(ren) meet the eligibility criteria established by the group medical plan. The retiree's group medical insurance is terminated as of the first of the month in which the retiree reaches their 65^th birthday. At this time Medicare becomes the primary medical coverage. If a spouse and/or child(ren) are covered at this time, the eligible spouse and/or children are extended continuation of medical insurance rights under the provisions of COBRA for up to 36 months from the date of termination of the retiree's coverage as long as they continue to meet the eligibility requirements of the group medical plan. It is important for the retiree to be aware that a spouse who is more than 3 years younger than the retiree may experience a gap in their coverage between the end of the 36 month COBRA continuation period and when the spouse turns 65 and is also eligible for Medicare.

When a retiree turns 65 and Medicare becomes the primary medical coverage, the retiree has the option of obtaining a Medicare supplement or MediGap policy on an individual basis. Currently the town does not provide any group medical coverage for the retiree beyond age 65.

MEDICAL PREMIUM SUPPLEMENT - Retirees who have 15 or more years of creditable service with the Town of Cary are eligible for a monthly medical insurance premium supplement. The premium supplement applies only toward the retiree's individual medical insurance premium and the amount increases with the years of creditable service. 100% of the individual group medical premium is paid for the retiree with 25 or more years of service. Please refer to Policy Statement #110 for additional information.

DENTAL INSURANCE - Retirees can continue their individual and/or applicable dependent dental coverage into retirement with no age limit. The retiree is responsible for paying the full premium, regardless of level of coverage. Dependents may be covered if they meet the eligibility criteria of the current group dental plan.

LIFE INSURANCE - Retirees with 25+years of service with the Town of Cary are automatically provided with $5,000 of life insurance. Retirees may also continue all or a portion of their base and supplemental life insurances in one of two ways: portability or conversion. Portability continues the term life insurance up to an amount equal to one times salary provided to the active employee by the Town combined with any supplemental coverage the active employee was paying for in addition to what the Town was providing. Conversion converts the term life insurance to a whole life policy. Whether continuing the term life or converting to whole life, this must be done within 31 days of retirement to be guaranteed continuation of coverage. Rates and procedures are subject to the provisions of the group policy provided by the current life insurance carrier.

This memo is intended to be a summary of current benefits available to retirees of the Town of Cary. These benefits are described in detail in contracts with the Town of Cary and in Town policy. The provisions of the contracts and Town policies are controlling and subject to change. None of the conditions or limitations thereof are waived or modified by reason of omission or misstatement in this memo.