Benefits Analysis

Part I: Benefits Matrix Part II: Inventory of Benefits

FALL 2011
RMI 3501 912126532 912120709

Benefits Analysis: Styron Page 1 of 26

Table of Contents
Benefits Matrix ------------------------------------------------------------------------------------------------- 1 Summary of Benefits ----------------------------------------------------------------------------------------- 2 Inventory of Benefits ----------------------------------------------------------------------------------------- 3-12 Introduction to the Healthcare Plan ---------------------------------------------------------------- 3 Medical Expenses ------------------------------------------------------------------------------------ 3-7 Aetna PPO Choice ll (MAP Plus) & (Catastrophic) Plan ------------------------------ 3-5 Dental: Delta Dental ------------------------------------------------------------------------5 Prescription Drug: Aetna -------------------------------------------------------------------- 5-6 Long Term Care ---------------------------------------------------------------------------- 6 Health Care Reimbursement Account --------------------------------------------------- 6-7 Dependent Care Reimbursement Account ---------------------------------------------- 7

Loss of Income: Death -------------------------------------------------------------------------------- 8-10 Non-Accidental, Non-Occupational Death --------------------------------------------- 8 Accidental Death --------------------------------------------------------------------------- 8 Occupational Death ------------------------------------------------------------------------ 8-9 Business Travel Accident ----------------------------------------------------------------- 9-10

Loss of Income: Unemployment -------------------------------------------------------------------- 10 Loss of Income: Disability ------------------------------------------------------------------------- 10-11 Loss of Income: Retirement ------------------------------------------------------------------------ 11-12 Other Exposures ------------------------------------------------------------------------------------- 12 Work/Life Exposures ---------------------------------------------------------------------- 12

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Benefits Matrix - Styron Loss Exposures Provided

Medical Expenses Hospital/Physician Dental Vision Prescription Drug Long Term Care Retiree Health Care Non-Accidental, Non- Occupational Death Accidental Death Occupational Death Yes Yes NO Yes Yes Yes Aetna (MAP Plus) Plan or Aetna (Catastrophic) Plan, Healthcare Reimbursement Account (HCRA) Styron Long Term Care (LTC) Plan COBRA, Medicare 401(k) Plan, Basic Life Insurance, Supplemental Life Insurance, OASDI 401(k) Plan, Basic Life Insurance, AD&D Insurance, Supplemental Insurance, OASDI 401(k) Plan, Basic & Supplemental Life Insurance, OASDI, Workers Compensation PA State: Unemployment Insurance, Severance Pay Sick Leave, AD&D Insurance, OASDI, Workers Compensation, STD AD&D Insurance, Basic & Supplemental LTD Insurance, OADSI AD&D Insurance, OASDI, Workers Compensation, Business Trip Accident Insurance AD&D Insurance Basic & Supplemental LTD Insurance, OASDI, Workers Compensation 401(k) Plan, OASDI Aetna POS Choice II (MAP Plus) Plan, Aetna POS Choice II (Catastrophic) Plan, Healthcare Reimbursement Account (HCRA) Delta Dental (High/Basic PPO) Plan, Healthcare Reimbursement Account (HCRA)

Coverage/Benefit Offered

Loss of Income: Death Yes Yes Yes

Loss of Income: Unemployment Unemployment Yes Loss of Income: Disability Non-Occupational, Short-Term Non-Occupational, Long-Term Occupational, Short-Term Occupational, Long-Term Yes Yes Yes Yes

Loss of Income: Retirement Retirement Yes Other Exposures Educational Assistance Work/Life Exposures Dependent Care No Yes Yes Employee Assistance Program (EAP) Dependent Day Care Reimbursement Account (DCRA)

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Summary of Benefits
Benefit Plan Aetna (MAP Plus & Catastrophic) Delta Dental (High/Basic PPO) MetLife Insurance Co. Basic Life and AD&D MetLife Insurance Co. Supplemental Life Chartis Business Travel Accident and Occupational Accident Insurance Liberty Mutual Insurance Co. Basic Long-Term Disability & Short-Term Disability Liberty Mutual Insurance Co. Supplemental LongTerm Disability John Hancock Insurance Co. Long- Term Care A.M. Best Rating A (Excellent)* B++ (Good)* Financing Contributory Contributory Noncontributory Fully Contributory Funding Self- Insured Self- Insured Eligibility Full-time and Part-Time active employees and dependents Full-time and Part-time active employees and dependents Full- time and Part-time active employees Full- time and Part-time active employees

A+ (Superior)*

Fully Insured

A+ (Superior)*

Fully Insured

A (Excellent)*

Noncontributory

Fully Insured

Plan Administrators Discretion**

A (Excellent)*

NonContributory

Fully Insured

Full- time and Part-time active employees

A (Excellent)*

Fully contributory

Fully Insured

Full- time and Part-time active employees

A+ (Superior)*

Fully contributory

Fully Insured

Full-time and Part-Time active employees and dependents

* - Source of A.M. Best Ratings is www.ambest.com ** - Plan Administrator has the full discretion to make special administrative arrangements as necessary.

Inventory of Benefits
Benefits Analysis: Styron Page 4 of 26

Introduction to the Healthcare Plan Styron LLC offers competitive benefits plans to its eligible employees and dependents. For its medical plans, eligible employees are defined as active, regular, full-time or part-time salaried U.S. employees of Styron LLC or entities that Styron has authorized to participate in the plan. Eligible dependents are defined as a legal spouse or dependent children principally supported by the eligible employee who are between the ages of 19 and 25. The eligible dependent can also be a full-time student, age 19 and older, or incapable of self-sustaining employment because of a physical or mental handicapping condition. Children who do not qualify as a dependent child may still be eligible if the employee has a Qualified Medical Child Support Order (QMCSO). This order gives a child the right to be covered under one of Styrons plans. There are four enrollment tiers under the healthcare plans offered by Styron. These enrollment tiers are Employee Only, Employee + Spouse/Domestic Partner, Employee + Children, and Family. Employees can enroll for coverage within 90 days of their hire date or choose to wait until the open enrollment period. Any employee who chooses to enroll in one of Styrons Medical Plans will automatically be enrolled into the Prescription Drug Plan.

Preferred Provider Organization Plans (PPO)

Styron provides employees with two medical plans: MAP Plus and Catastrophic Medical. Participants of both plans are automatically enrolled in the Mental Health and Substance Abuse Managed Care Plan as well as the Prescription Drug Plan. These medical plans are administered through a Third Party Administrator called Aetna Administrators. MAP Plus and Catastrophic Medical are both self-insured plans and provided to employees and their dependents on a contributory basis. MAP Plus plan participants contribute 15% of the overall plan while Catastrophic Medical participants contribute 30% of the charge or 30% of the Plan Allowable Amount, whichever is less. Contributions are deducted monthly from an employees paycheck, on a pre-tax basis. Employees have the option of

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changing their pre-tax plan contributions at the end of a plan year or within 90 days of a change in status. A change in status includes events that change legal marital status, a birth or death of a dependent, change in place of residence, or if a dependent or spouse becomes eligible for coverage. For both plans, participants have the option of selecting a physician/hospital in-network (one provided by Aetna) or selecting a physician/hospital out-of-network (provider of their choice). MAP Plus has three types of deductibles: General Deductible, Inpatient Hospital Deductible, and Emergency Room Deductible. The General Deductible must be reached before a participant gets coverage for medical expenses. If the participant stays in-network, the deductible is $125 per individual, $250 for an individual plus one, and $375 per family. If the participant goes out-ofnetwork, the deductible is $500 per individual, $1000 for an individual plus one, and $1500 per family. There is an Inpatient Hospital Deductible when a participant is hospitalized through an in-network provider. It is $250 with a maximum of two inpatient hospital deductibles per family, per year. If the participant is readmitted for the same condition within 90 days, the inpatient hospital deductible is not assessed. The Emergency Room Deductible is for emergency room treatment received from an out-ofnetwork facility. This deductible is $100 per visit. To protect MAP Plus plan participants from extremely large medical bills, there is an out-ofOut-of-Pocket Maximums Individual Family In-Network $5,000 $10,000 Out-of-Network $6,000 $12,000

pocket maximum for both in-network and out-of-network coverage (see chart below). The MAP Plus Out-of-Pocket Maximums are separate from the Prescription Drug Out-of-Pocket Maximums. MAP Plus Plan Out-of-Pocket Maximums

Participants in the Catastrophic Medical Plan are responsible for one of two kinds of deductibles: an in-network deductible or an out-of-network deductible. The in-network annual

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deductible is $2500 for an individual and $5000 for a family. The out-of-network annual deductible is $3000 for an individual and $6000 for a family. Similar to the MAP Plus plan, participants have outof-pocket maximums to protect them from large medical bills. There is not a separate out-of-pocket maximum for Prescription Drug Plans. The Prescription Drug copays are applied to the annual deductibles. The Catastrophic Medical Plan out-of-pocket maximums are flat rates and differ in enrollment tiers (please see chart below). Catastrophic Medical Plan Out-of-Pocket Maximums
Out-of-Pocket Maximums Individual Family In-Network $5,000 $10,000 Out-of-Network $6,000 $12,000

Dental Styron offers its employees dental coverage, which is self-insured and administered through a third party administrator called Delta Dental. The two plans offered are Delta Dental PPO High and Delta Dental PPO Low. Those eligible for Styrons medical plans are also eligible for both dental plans. These dental plans are offered on a contributory basis and contributions are deducted monthly from an employees paycheck, on a pre-tax basis. Because of IRS regulations, contributions for domestic partner coverage are deducted on a post-tax basis. Diagnostic and preventive services, radiographs, and sealants are all covered at 100%, whether an employee is enrolled in the Low or High plan. Furthermore, employees enrolled in the Delta Dental PPO High plan, receive 100% coverage for these services whether they see a PPO Dentist, a Delta Dental Premier, or a nonparticipating dentist. Participants in the Delta PPO Low plan pay 65% of the costs of minor and major restoratives services and orthodontics. The lifetime maximum for each eligible person is $750. Participants in the Delta PPO High plan who visit a PPO dentist pay 20% of restorative services, 40% of prosthodontics, and 50% of orthodontics. If said participants visit a nonparticipating dentist or Delta Dental Premier, they pay 50%

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of the costs of all restorative services, prosthodontics, and orthodontics. The lifetime maximum dollar amount that the PPO High plan pays is $1500 for each eligible person. Prescription Drug Styron offers prescription drug coverage under all medical plans. Employees are automatically enrolled in the Prescription Drug Coverage when they enroll in any medical plan. The Prescription Drug benefits are administered through Aetna Administrators. Employees have four options for purchasing prescription drugs: in-network pharmacies, out-of- network pharmacies, Aetna Mail Service Pharmacy, and Aetna Specialty Pharmacy. For MAP Plus participants that go to in-network pharmacies, the copayment after meeting the required deductible is 20% for generic and preferred brand-name drugs and 30% for non-preferred brand-name drugs. MAP Plus participants that go to out-of- network pharmacies will pay the full retail price and submit a claim for a reimbursement. The reimbursement amount is 80% of the Plan Allowable Amount for Generic and Preferred Brand-Name and 70% of the Plan Allowable Amount for the Non-Preferred brand-name drugs, after meeting the required deductible. Participants in the Catastrophic Medical Plan must pay the total cost of the prescription and then file a claim to receive reimbursement. Long- Term Care Styron provides Long Term Care coverage to employees on an employee-pay-all basis. This coverage is fully insured through John Hancock Life and Health Insurance Company, which has an A.M. Rating Best of A+ (superior). The services covered under the plan are nursing home care, alternate care facilities, community based professional care, adult day care, and hospice care. There are two coverage choices or plan decisions offered: Daily Maximum Benefit and Nonforfeiture Benefit. The Daily Maximum Benefit (DMB) is the most the insurance will pay for all covered services received on any day. The Non-Forfeiture Benefit gives participants the choice of including a reduced lifetime maximum paid-up benefit at no additional cost. This benefit allows

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participants to stop making premium payments and receive a reduced level of coverage if the participant has been insured for at least three years. If this option is not selected, the Contingent Nonforfeiture Benefit will be included in the Long Term Care coverage at no additional cost. In the event of a substantial premium increase, the contingent non-forfeiture benefit allows participants to stop making premium payments and receive a reduced level of coverage. Healthcare Reimbursement Account (HCRA) Styron offers to its employees a Healthcare Reimbursement Account (HCRA) for which they can use pre-tax dollars to pay for eligible medical and dental expenses. The Healthcare Reimbursement Account (HCRA) is funded by employee payroll deductions and administered through Aetna Administrators. All active full-time and part-time employees are eligible to participate in the Healthcare Reimbursement Account. Employees must enroll in the plan within 30 days of hire, during open enrollment, or upon experiencing a change in status. Employees must also re-enroll each year in order to continue participating in the account. Expenses incurred can be filed until April 30th of the following Plan Year. The incurred expenses must be during January 1st through March 15th in order to be filed until April 30th. According to IRS regulations, any balance that remains in the account after April 30th will be forfeited.

Dependent Care Reimbursement Account

The Dependent Care Reimbursement Account allows eligible employees to use pre-tax dollars to pay for eligible dependent care expenses. Eligible expenses are for the care of a qualifying individual or for ordinary household services performed for the benefit of the qualifying individual. These expenses can be paid for by pre-tax dollars deposited into the Dependent Care Account. Participants can deposit $100 to $5000 per family each year. The total amount deposited into the account cannot exceed the participants earned income.

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Loss of Income
Life Insurance
Basic Life, Accidental Death and Dismemberment (AD&D) Insurance Supplemental Life, Supplemental Dependent Life Insurance

Styron provides Basic Life Insurance and AD&D Insurance, on a non-contributory basis, which helps cover loss of income resulting from a non-accidental death or an accidental death and dismemberment. The plan is fully insured and is provided through Metropolitan Life Insurance Company, also known as MetLife, which has an A.M. Best Rating of A+, or superior. All active, fulltime and part-time employees are automatically eligible for coverage on August 1st. However, in the event that employment becomes effective after that date, the employee will become eligible on the first day of the month coincident with or after a 30-day Waiting Period. Employees will receive one times their base annual salary rounded up to the next $1,000 subject to a maximum of $250,000. If any salary changes take place the coverage amounts will be automatically adjusted to reflect such changes. If the employee is on a leave of absence approved by Styron, Metropolitan Life Insurance Company, as its Plan Administrator, has the full discretion to make special administrative arrangements as necessary. This can include deferring Employee contributions on a temporary basis during the leave of absence or requiring the Employee to repay premiums when the employee returns to work, or any other arrangements the Plan Administrator deems appropriate. AD&D Insurance, which pays an amount equal to the employees Basic Life Insurance, helps pay for losses incurred within 365 days from the occurrence date. If an employee reaches age 65 but is under age 70, their coverage amount for Life Insurance will be reduced to 65% of the benefit. On their 70th birthday, however, that amount will be reduced further to 50% of their benefits. Otherwise, the amount an employee receives will be proportional to the extent of the injury they suffer. In addition, in the event of death, the employee is entitled to the entire principal sum payable amount. AD&D also provides the following additional benefits: Air Bag Benefit, Seat Belt Benefit, Child Care Benefit and Common Carrier Benefit.

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Styron also offers Supplemental Life Insurance allowing employees to elect to purchase additional Life and AD&D Insurance. MetLife, as this plans provider, maintains fiduciary responsibility for making decisions as to whether a Claim for Benefits is payable. Consequently, Styrons Third party administrator, OneSource, determines eligibility as well as full discretion to interpret the provisions of the plan. Unlike the Basic plan, the Supplemental Plan is offered on a fullycontributory basis in which case employees are responsible for the entire cost of coverage. Contributions are made through post tax payroll deductions, based on employees annual base salary. Eligible employees, with the tobacco usage being taken into account, may purchase coverage offered in increments ranging from one times their annual base salary, rounded up to the next $1,000, to five times their annual salary up to a $500,000 limit. Styron also provides Dependent Life Insurance under the Supplemental Plan, on an employeepay-all basis in exchange for providing coverage for dependents at group rates. Eligible dependents include Spouse/Domestic Partner as well as natural, adopted or step-children. The plan defines a Child as being at least 15 days old and less than 21 years old. However, if the Child is a full-time student at an accredited school, college, or university that is licensed in the jurisdiction where it is located, is unmarried, is financially supported by the employee and is not employed on a full-time basis, their age eligibility is extended to 23 years. In addition, eligible dependents have access to Accelerated Benefit Option for Spouses/Domestic Partners only. If an employees Spouse/Domestic Partner has been diagnosed as terminally ill with 12 months or less to live, they may be eligible to receive up to 80% of their Spouse/Domestic Partner Dependent Life Insurance benefits before their Spouse/Domestic Partners death.

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Business Travel Accident

As a global corporation, Styron employees are prepared to make several business trips around the world, throughout the year, to conduct Styron business. Taking this into account, Styron offers Business Travel Accident Insurance on a non-contributory basis. This fully insured plan is provided through Chartis, , which has an A.M. Best rating of A, or excellent and administered by the National Union Fire Insurance Company of Pittsburgh, PA, a Chartis company. If an eligible employee incurs a personal injury while traveling on Styron Business, he or she would be covered for the loss of income they suffer. In addition, if spouses/domestic partners and/or dependent children incur a qualifying injury during travel that is sponsored, approved, and paid for by Styron, they too are covered. In this Plan, a Dependent Child is defined as a natural, legally adopted, or stepchild who is under age 19 (age 25 if a full-time student), is unmarried, and is dependent upon the Employee for financial support. Regardless of where the incident occurred, the benefits are paid in U.S. Dollars. The employee is entitled to the U.S. dollar a percentage of the Principal Sum payable, which is five times the U.S. dollar equivalent of the employees annual base salary up to a maximum of $2 million. If more than one loss results from a single accident, only the highest benefit amount is payable. This plan covers the employee any time he/she is away from their normal work location, within United States. The Plan coverage becomes effective the minute an employee leaves for a business trip, whether that is from their home or from the work location in the United States, whichever is last, until the time he or she returns to their home or work location, whichever is first. However, normal commuting or vacations are excluded.

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Unemployment
In the event of a job-elimination or lay-off, Styron provides severance pay to all eligible employees who experience loss of income due to the two aforementioned circumstances. The severance package is determined by two components, the employees salary and the duration of service.

Short-Term Disability (STD) Insurance/ Sick Leave

Styron provides its employees with Short Term Disability Insurance through Liberty Mutual Life Assurance Company of Boston, which has an A.M. Best rating of A, or excellent. This plan is fully insured and offered on a non-contributory basis. Its primary purpose is to provide short-term financial assistance, due to loss of income, as a result of a sickness or covered injury that causes a short-term disability. All active, full-time and part-time employees are automatically eligible to receive 100% of their weekly income compensation for duration of six months, more specifically 180days. After the 180days that the employee has claimed disability, Long-Term Disability Insurance is activated. In the event that eligible employees suffer from a sickness causing him or her to stay home, he or she is entitled to an unlimited amount of Sick Leave days (Paid-Time-Off). However, after six consecutive Sick Leave days, the employee is required to apply for Short-Term Disability.

Long-Term Disability (STD) Insurance/ Sick Leave

Styron provides Long Term Disability Insurance, which is fully insured and is provided through Liberty Life Assurance Company of Boston, which has an A.M. Best rating of A, or excellent. The purpose of this coverage is to provide partial income replacement, due to loss of income resulting from an injury or illness, for all active, full-time and part-time employees and their dependents in the event of a lengthy disability. If employment begins after August 1st, the effective date of coverage, the employee will become eligible on the first day of the month coincident with or after a 30-day Waiting Period. When the employee is disabled for more than 180 days, the Long Term Disability coverage is

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activated. At this point, the employee has two options, Option 1 and Option 2. Under Option 1 the employee will receive 50% of income protection. An additional 16.7%, totaling to 66.7%, of income protection, under Option 2(Supplemental LTD), may be purchased by eligible employees. LTD benefits are designed to be offset by other disability benefits such as, but not limited to, Workers Compensation and Social Security.

Retirement
Styron offers a 401(k) plan to eligible employees as an incentive to start saving for future retirement income needs. The 401(k) is funded through a trust maintained with Fidelity Management Trust Company. Both employees and Styron contribute to the plan. Employees are eligible to participate in the 401(k) following his/her date of hire if the employee works full-time. If the employee is less than full-time or a student, then the employee shall become eligible to participate in the 401(k) plan once he/she turns 21 years of age and has completed at least 1,000 hours of service during an eligibility computation period. After these participation requirements are satisfied, the employee can make employee deferral contributions. The participants compensation must first be defined in order to compute contributions under the 401(k) plan. Only compensation paid to participants for their services performed while employed will be considered compensation. For 2011, the maximum annual amount of compensation that will be taken into account is $245,000. Participants can also elect to defer a percentage of their base pay into the 401(k) plan upon satisfying the plans eligibility requirements. Participants in the plan are entitled to the funds in the account when they reach the Normal Retirement Age of 65. They receive vesting credit for the amount of years working for Styron. The numbers of years of service with Styron are also included for vesting purposes. Rollover Contributions, Employer Matching Contributions, Qualified Nonelective Contributions, and Employee Deferral Contributions are always 100% vested. Less than three years of service is not vested. However, three or

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more years of service is 100% vested. Also, if an employee terminates employment at Styron and is less than 100% vested in their 401(k) account, they may forfeit the non-vested portion of their account.

Other Exposures
Work/Life
Styron provides an Employee Assistance Program (EAP), which is funded through Styrons general assets. Employees are automatically covered under EAP if they work for Styron. The EAP benefits are provided at no cost to the employee (non-contributory). These benefits are regardless of enrollment in one of Styrons Medical Plans. However, if an employee is not enrolled in one of Styrons Medical Plans, he/she is not eligible for the full benefits offered under the Mental Health & Substance Abuse Plan. EAP offers confidential and professional services to help employees with difficult personal problems. EAP includes 24 hour emergency service, problem assessment, short-term counseling and referral to network resources. This program is provided under EAP Counselors, who provide Medical EAP Benefits and Non-Medical EAP Benefits. EAP Direct Services (also known as Non-Medical EAP Benefits) provide marital counseling, counseling on family and adolescent problems, and counseling for financial problems.

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Part III: Analysis of Benefits

FALL 2011
RMI 3501 912126532 912120709

Benefits Analysis: Styron Page 16 of 26

Introduction
Once part of The Dow Chemical Company, Styron, LLC was later purchased in June 2010 by Bain Capital, a leading alternative asset management firm. Today, Styron is amongst the largest manufacturers of plastics, latex and rubber employing approximately 2,100 employees in over 40 countries worldwide. While building upon the seasoned foundation Dow Chemicals established, Styron has taken advantage of the existing vibrant marketplace and technology leadership opportunities to deliver high performance products and innovative thinking. As a five billion dollar company, it serves a wide range of end-markets such as automotive, glazing and sheet, paper and board coatings, packaging, consumer electronics, large and portable appliances, tiers and carpet backing. Styrons corporate headquarters, located in Berwyn, Pennsylvania, is responsible for facilitating executive and administrative decisions for the company. In order to ensure employee satisfaction and productivity, Styron appointed Annette DiBernardino as the Human Resource Benefits Coordinator to manage and facilitate a contractually inherited benefits plan from Bain Capital for the 380 employees and dependents. Annette communicates directly with the respective vendors and in conjuncture with her Human Resources associates, as well as seeking consulting from benefits specialists like Mercer and Towers Watson. In doing so, she is able to use her actuarial background to gather necessary information to appropriately coordinate a benefits plan that compliments Styrons workforce and financial capacity in 2012, when Bains benefits plan expires.

Overall Design Considerations and Objectives in Offering Employee Benefits

When Styron, LLC was established in June 2010, there were certain agreements made as to what benefits would be offered to its employees. When Bain Capital, one of the worlds leading private, alternative asset management firms, bought Styron in 2010, it was agreed and contracted to maintain all benefits offered to Styron employees for two years. This contractual agreement has limited and affected the amount of changes Styron could make to its benefits. When Annette was asked why Styron offers benefits to its employees, she responded by saying it allowed the company to attract and retain employees. She said that it also allowed Styron to compete with its competitors. Since employees look first at compensation and bonuses, Styron wanted to make sure that its benefits were rich and comprehensive enough to distinguish it from its competitors. In doing so, Styron provides very similar benefits to

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the ones offered by its competing companies, which are chemical companies. Annette understands the importance of having extensive benefits plans that employees appreciate, but does not adversely affect the companys financials. Because the prior plans were comprehensive and competitive enough to remain for two contractual years, Annette believed Styron made a good decision keeping the benefits plans from Bain Capital. Although she does not have a benefits committee, whenever Annette needs help with employee related concerns, she can contact someone from the Human Resources Department. While much change cannot be done to plan designs until 2012, Annette says that a considerable amount of employees must request a benefit or change to coverage for it to be considered after 2012. However, these changes or requests cannot have a major financial impact on the company or be discriminatory against any eligible employees. So far, not many employees have given negative feedback over the benefits currently offered. Demographics When deciding whether or not to keep the benefits offered by Bain Capital, Styron had an important role in mastering the demographics of the company in relation to the benefits offered. The average age of an employee at Styron is 46, with 60% males and 40% females. For employees with spouses/domestic partners, benefits are only offered to those spouses/domestic partners who are employed at an employer that does not offer benefits are unemployed. With these requirements in mind, Styron used the enrollment tiers that Dow Chemicals offers: Employee, Employee + Spouse/Domestic Partner, Employee + Children, and Family. Styron also has more full-time employees than part-time employees. However, all benefits are offered to both full-time and part-time employees. Funding and Financing Considerations Styron provides both self-insured and fully insured benefits plans for several reasons. Because it is a financially sound company with predictable cash flows, Styron chose to self-insure their medical plans. Annette believes that whether a company should self-fund any plan depends on whether or not that company is risk adverse. Since self-funding requires a company to be in full control of benefits and claims arising out of benefits offered, a company must have enough claims history information and be financially sound in order to self-insure. Also, with Styron being a multi-state employer, offering the same benefits to employees in different states, it would be difficult to find an insurance carrier that could accommodate such plans offered at Styron in different states. With a selfinsured arrangement, Styron is free to design its plans with very few restrictions. Annette says that she has also met with vendors who have looked at Styrons past claims and realized that Styron will continue to save money if it selffunded its medical plans. This is because most of Styrons actual losses have been lower than its expected losses.

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Styron also utilizes stop-loss coverage for catastrophic losses for which Styron has not budgeted. The company uses a General Asset Plan as its self-funding vehicle. Aetna, the administrator of the medical benefits plans, pays claims until the amount reaches a certain threshold point. When this point is reached (usually after one month), Aetna directly draws checks from Styrons account. Aetna also provides Styron with a list of claims paid each month. Styron chose to fully insure its Life, BTA, STD, LTD, LTC and AD&D benefits plans. Annette believes the costs to self-insure these plans would be too high for the company. She also says the potential losses arising from these benefits would be too catastrophic for Styron to payout. Styron finances medical benefits on a contributory basis. This is to help the company stay financially sound while healthcare costs continue to rise. Although Bain made these financing decisions, Annette says that employees do not think their contributions are unreasonable. However, she has not done a cost-benefit analysis to determine whether or not employees still feel this way. Styron chose to offer Life and AD&D on a non-contributory basis to ensure that its employees received sufficient coverage.

Problems, Issues, Concerns, & Considerations in the Design of the Health Benefits Due to the fact that Styron contractually inherited existing benefits plans from its parent company, Bain Capital, there was not much consideration on the design of the health benefits. Nevertheless, during the two contractually bonded years, the health benefits plans have experienced several problems that will certainly influence the design of Styrons future health plans. Styron offers all active, part-time and full-time employees, and in most cases their dependents, a rich set of benefits to attract talented employees and to retain and maintain its current valuable employees. Since Styron self-insures its medical plans, it is able to construct benefits plans that are cost efficient in proportion to its financial capacity. One of the best cost containment techniques exemplified by the medical plans is its four enrollment tiers Styron offers: Employee Only, Employee + Spouse/Domestic Partner, Employee + Children, and Family. Since Styron has a provision that states that an employees spouse who is employed by another employer must enroll for benefits under his/her companys benefits plan, it was essential for the enrollment tiers to cater to the diversity of Styrons employees and their dependents. This way each type of employee, whether single, married with an unemployed Spouse/Domestic Partner, a single parent, or married with an employed Spouse/Domestic Partner, can choose the tier that best caters to his/her respective medical care needs. As a result,

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employees will not receive benefits beyond their needs or enroll in a plan that is inadequate, because each tier offers benefits specifically targeted to a specific type of employee. Furthermore, Annette explains that children usually utilize their medical benefits less than adults, therefore in accordance to the aforementioned provision, by offering an Employee + Children tier separately, as opposed to an Employee + Dependents tier, employees can enjoy a diverse set of contribution rates to complement their needs, while Styron saves money. Under Styrons Prescription Drug coverage, which offers four different purchasing methods, and Dental coverage, where Styron offers two options, employees are able to choose among a variety of options that best suit their medical needs. For instance, the premium charged for the Delta Dental PPO High plan, which is the more preferred of the two options by plan participants, does not reflect the actual value of the coverage. Employees enrolled in the PPO High plan pay lower rates to receive high quality and an abundant set of benefits. According to Annette, when rates were set, the Dental PPO Low plan was kept the same while the rates for the Dental PPO High were increased. Despite an increase in rates, more Styron employees are enrolled in the Dental PPO High plan. Benefit plans greatly valued by plan participants are the Health Care Reimbursement Accounts Styron offers to eligible employees and the Dependent Care Reimbursement Accounts for their dependents. These accounts attract participation because employees and dependents enjoy the pre-tax advantages these benefits offer to pay for eligible medical and dental expenses. In fact, their dependents also have access to pre-tax advantages on their contributions to dedicate to relevant cost sharing expenses for eligible medical and dental care. Annette shares concerns about employees who over budget for their reimbursement accounts and lose the funds not used. To combat this issue, Annette makes sure to send all enrollees information about properly budgeting for these reimbursement accounts. One of the major features that make Styrons Health Benefits Plan so rich is its accessibility to eligible dependents. However, such generosity usually attracts dishonest behavior by the very participants it was designed to serve. In order to filter out ineligible dependents, and save costs by not extending valuable benefits to those who do not meet eligibility standards, Styron requires each employee to submit his/her dependents birth certificate and/or a marriage certificate upon enrolling for coverage. However, it does not have an auditing system in place to distinguish dependents that attempt to double-dip, by consuming benefits at their own company and accessing Styrons dependent care benefits. In this way, Styron is not using an evident cost containment opportunity. One of the major concerns Annette shared is the administrative complexity of the Health Benefits.

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Internally, Annette is the only Benefits specialist who negotiates with vendors directly. Therefore, she relies on the administrative expertise of Aetna, for the medical plans, Liberty Mutual, for the Life Insurance plans, and Chartis for administering the Business Travel Accident (BTA) coverage. While she states that the Life Insurance and BTA Coverage are administratively manageable, the rich and complicated Medical Plan administered by Aetna has experienced far more problems due to its intricate multi-tiered design. Offering several plan options for medical coverage has caused some employees to complain about that their claims not being paid. Other complaints include employees not receiving their insurance cards. Oftentimes, these employees voice their concerns to Annette. Because of her fiduciary responsibility, Annette explains that she must discuss these issues with Aetna and attempt to get them resolved. The best solution is to deploy information gathering methods, such as benefits-satisfaction surveys, benchmarking, or outside consulting to simplify the Benefits Plan design without devaluing the plans components. Involving employees in the design process for 2012 can also help to avoid these administrative issues in the future. Otherwise, addressing the administrative issues ineffectively will cause other issues to arise, such as dissatisfied employees. Thus, in order to ensure a smooth transition, efficient plan communication is essential.

Problems, Issues, Concerns, and Considerations in the Design of Non-Retirement Benefits To promote employee value, Styron offers Business Travel Accident Insurance (BTA). The plan is fully insured and provided automatically to employees at no additional cost. BTA benefits pay if an employee is injured or dies in a covered accident while traveling for Styron. These benefits are in addition to any life benefits in which the employee has coverage. Annette says that BTA coverage is more of security coverage for employees traveling for the company. It ensures that if an employee were to have an accident during his/her travel, he/she will be fully covered. Another very important component of Styrons Benefits Plan is the Employee Assistance Program (EAP) offered to eligible employees on a non-contributory basis. This program is especially useful in a corporate environment, such as Styrons, where individuals are working under immense amounts of stress. This way, they are able to seek some personal or financial advising that would allow them to manage those aspects and prevent them from interfering with their work load. As a result, Styron fosters a motivated and productive workforce. Although the EAP contributes further to the wealth of the Benefits Plan, when Styron is released from their

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contract by Bain Capital, it should consider offering other Work/Life Benefits. Firstly, offering Tuition Reimbursement could be an investment for the company. By encouraging employees to pursue higher education in their current field it would enhance the current talent pool. In addition, other benefits such as gym memberships and smoking cessation programs could be effective cost containment techniques. Promoting proactive habits would improve employees health and in-turn reduce the number of medical claims arising from poor health.

Regulatory Compliance HIPAA Annette, being the Human Resources Benefits Coordinator, is very concerned with the privacy of the employees enrolled in Styrons benefits plans. She keeps all personal employee documents, including health information, locked in a safe drawer. Also, any personal health and claims information is sent to Aetna, the third party administrator who also keeps this information secured. Although Annette does not currently rely on anyone to consult her on plan designs or issues, the Human Resource Department at Styron has access to employee information. This can be an issue since employees in the Human Resource Department can access their coworkers information. Thus far, Styron has not had any HIPAA non-compliance issues. COBRA Annette is reliant on Aetna to handle all of COBRA compliance and any employee concerns with COBRA. Any full-time or part-time employee who leaves the company for any reason other than gross misconduct is eligible for COBRA coverage. Similarly, any employee who is transferred from full-time to part-time employment and is no longer eligible for benefits due to his/her employment status is also eligible for COBRA coverage. Qualifying beneficiaries have 60 days from the time of the qualifying event to notify Annette. Annette then, has 30 days to notify Aetna, the administrator, of the qualifying beneficiary and event. Although Bain bought Styron in June 2010, there has been no change to any of Styron employees employment and as a result, no employees are on COBRA coverage. Annette believes that any COBRA coverage can potentially be complicating since there have been some complaints about Aetnas customer service. She believes potential qualifying beneficiaries will prefer her, someone they know personally, to do most of the COBRA compliance. ERISA There are several requirements that Styron must fulfill under ERISA. These include fiduciary

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responsibility, communication of benefits, and discrimination testing. Styron complies with fiduciary responsibility by offering extensive benefits to its employees. They offer two medical plans: MAP Plus and Catastrophic Medical. They also offer two dental plans: Delta Dental PPO High and Delta Dental PPO Low. Although Annette did not choose these plans, she believes that offering a PPO plan instead of an HMO plan allows employees more freedom of choice, since they have the option of going out-of-network. Even though Styron does not encourage employees to enroll in specific plans over others, the Delta Dental PPO High has the highest participation rate. Styron also takes proper measures to communicate benefits to employees. All benefit plans are communicated via Styrons intranet network and electronically though e-mails. Employee benefits are also communicated during new hire orientations. If there are any changes to benefits offered to employees, Annette must, under ERISA requirements, provide a Summary of Material Modifications (SMM). Annette ensures that all plans are non-discriminatory by offering the same benefits to all eligible employees. Since ERISA administration is not outsourced, Annette ensures that she follows all ERISA requirements by attending ERISA seminars at Mercer Consulting and reading many ERISA articles. PPACA There have been a few changes made to benefits offered to Styron due to PPACA. Since Styron plans were not grandfathered, it was required to make changes to lifetime limits on benefits and the maximum age of dependent children. Annette does not believe these are major issues. These changes received positive feedback and did not have much of a financial impact on Styron. Styron formally defined dependent children as a child principally supported by the eligible employee that is legally or naturally the employees child and/or resides in the household for whom he/she has legal guardianship or permanent legal custody. The dependent child could also be aged 19 to 25 and a full-time student. After May 31, 2011, Styron includes coverage for adult children of employees up to age 26. Annette has also changed preventive care contributions. Prior to PPACA, Styron made enrollees share the costs of preventive care services. Now, there is no cost sharing for preventive care and they are 100% covered.

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Conclusion Since the establishment of Styron, LLC in June of 2010, there has been very little changes to its benefits plans. Because of its contractual agreement with Bain, the only modifications to benefits and coverage were the ones required by PPACA. In the upcoming year, Styron plans to meet with its consultants to decide whether to modify existing plans or keep the ones created by Bain Capital. Annette should keep in mind the requirements and provisions under ERISA and PPACA so that she can offer benefits to employees that fall under federal regulations.

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Work Cited "Our Company - Styron." Styron | Powering Ideas. Styron, 2011. Web. 07 Dec. 2011. <http://www.styron.com/company/>. "Self-insured Health Plans: Questions and Answers." Www.shrm.org. Self-Insurance Institute of America Inc. Web. 07 Dec. 2011. <http://www.shrm.org/Publications/hrmagazine/EditorialContent/Documents/Self_Insured_Health_Plans_S IIA.pdf>. Tinnes,, Christy, and Brigen Winters. "Preparing for Health Care Reform: A Chronological Guide for Employers." Practical Law Company (2010): 1-7. Web. 07 Dec. 2011. <https://blackboard.temple.edu/bbcswebdav/courses/Drennan_RMI205/gbaupdateoct10.pdf>.

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Thank You Note Dear Annette DiBernardino, Firstly, we would like to express our deepest appreciation for dedicating your time and efforts to answering our questions during the Interview on Wednesday afternoon, December 7th. Your willingness to answer all our questions thoroughly and completely has truly contributed to our ability to complete our task more successfully. In addition, we also appreciate your several, prompt, responses to our emails and calls regarding further questions throughout the process, beyond the interview. Best Regards, Mervat Hamza & Christina Abebreseh

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