Message from John August

Please read the attached correspondence from Kaiser Permanente.

KP has offered to extend coverage to dependents as of June 1,2010.

In anticipation of the new requirements under the Health Care Reform Law which will extend dependent coverage up to age 26, KP has decided to engage in an "early adoption" of this requirement thus continuing coverage for dependents who will tum 26 prior to the implementation of the requirement next year.

The Coalition has asked that the program be implemented as soon as possible, which is June 1, 2010. While there may be some questions or issues that develop upon implementation, I felt that it was prudent to ask for implementation of this new benefit as soon as possible, rather than hold it up based potential problems that we have not yet had time to review.

I am assured that any such problems that may arise will be addressed, but in the meantime we will be able to take advantage of this new benefit for our members and their families.

Let me know if you have any questions. Thanks.

Coalition of Kaiser Permanente Unions, AFL-CIO
888 16th Street, NW - Suite 670 Washington, DC 20006
202-974-8090

May 14, 2010

Mr. John August
Executive Director
Coalition of Kaiser Permanente Unions

Subject: Continued Health Benefits Coverage to Age 26 Effective June 1,2010

Dear John,

This letter is to confirm our conversation today and to provide more information on the offer of continued health benefits coverage to employee dependents up to age 26.

As of January 1, 2011, Health Care Reform will require employers to extend coverage for eligible dependent children up to age 26. As a health care provider, Kaiser Foundation Health Plan ("Health Plan"), believes that maintaining dependent coverage is important, so we have developed an "early adoption" approach that we are offering to all our group customers. As of June 1,2010, Health Plan is offering to allow employers to continue dependent coverage for currently-enrolled adult children up to age 26.

As an employer, Kaiser Permanente would like to extend this early expanded coverage provision to employees represented by the unions in the Coalition of Kaiser Permanente Unions. We plan to extend this to our non-represented employees as of June 1,2010. Please note that certain union members receive health care benefits through labor trusts, not directly from the Kaiser Foundation Health Plan (e.g. UFCW Pharmacy unit in Southern California). In these instances, the labor trust will be offered this opportunity as a group customer and application to the affected members will be subject to the decision of the responsible trust.

Health Plan decided on June 1,2010 because it is the earliest feasible date. For systems and operational reasons, we need decisions right away.

This new development has emerged quickly. In order to operationalize this as soon as possible and not have employees' eligible dependents be dropped, a decision concerning making this change for employees must be made by Friday at noon PT, May 14,2010. It is therefore imperative that we discuss this immediately and answer any questions you might have. We can potentially implement the change for employees represented by Coalition unions on July 1, if it is impossible for you to make a decision in time to meet the June 1 deadline, provided the decision is made within the next few weeks.

The June 1 implementation that KP is offering to employers is the following:

• As of June 1, currently covered eligible dependent children who would lose coverage as a result of turning age 25 will continue to be covered as dependent children under the employee's health care until age 26.
• The requirement to be either a full time student or tax dependent will be eliminated to mirror the health care reform requirements.

Per certain regional practices and policies, dependents can be added with new hires, with a qualifying event, or at open enrollment. KP will be addressing the broader range of 2011 Health Care Reform issues with our unions soon, when the issues and alternatives become clearer.

With your concurrence, the only thing we need to do between now and then is to communicate this change to employees. Employees will not need to take any action. Please review the above. If you want more detail before you decide whether or not to include the employees represented by Coalition unions under this new provision, please contact David Cates, or me as soon as practicable. If you are in agreement with this change, please send me a letter, or email, that agrees with this change. If after your questions have been answered, you decide that the Coalition does not want to be covered under these provisions at this time, please likewise send me a letter confirming this decision.

Sincerely,

Chuck Columbus, Senior Vice President, National Labor Relations

cc: David Cates, Vice President, Compensation and Benefits Judith Saunders, Director - Labor Relations, PO

Revised May 14,2010