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2011 U.S. Benefits Update

2011 Annual Enrollment Nov. 1 – 19, 2010

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AGENDA

U.S. Medical – Goals and Results

Consumer-Driven Health Care (HDHP) – Putting you more in control

Helping You Control Your Costs – HDHP with HSA, and New Tools on Your Life Choices (YBR)

2011 Benefit Changes

Controlling Costs and Improving Health

Health Risk Assessment and Biometrics

Dependent Eligibility Verification

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U.S. Medical – Goals and Results

U.S. Benefits Results and Goals Claims have been significantly higher than premiums

Deliver effective medical benefits and protect employees from catastrophic financial loss

Goal of greater than 50% enrollment in HDHP

Consumer-Driven Health Care (HDHP) Allows participants to use a tax advantaged Health Savings Account (HSA)

Gives participants an incentive to learn about the costs and quality of care before spending

Studies show HDHP participants are:

Twice as likely as those in other medical options to learn about costs

Three times as likely to choose a less expensive treatment option

Chronic patients were 20% more likely to follow treatment

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ConocoPhillips Movement to the HDHP

In the last three years:

Participant costs reduced by $20 million

Company costs reduced by $25 million

Total savings of $45 million!

Active Enrollment History

50%

37%

31%26%

34% 34%

27%

21%

10%

25%

38%

51%

6% 4%2%3%

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 Projected

PPO EPO HDHP Traditonal

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Phase One: Preventive Care

Network Preventive Medical Care is covered at 100%

Certain Preventive Prescription Drugs are covered at 100% up to $1,500/person/yr.

If you meet the $1,500 limit, then you pay 20% until you reach the out-of-pocket maximum.

These amounts do not apply to your deductible (deductible waived).

HDHP: When you pay…and when you don’t(Network Benefits)

Phase Three: Meet your out-of-pocket

maximum You pay 20% of the negotiated / discounted costs for covered network care and prescription drugs until you reach the out-of-pocket max.

Annual Out-of-Pocket Max.: (amount includes deductible): $4,000 - “You only” $8,000 - other coverage levels

Phase Four: The HDHP handles

the rest The plan pays 100% of covered medical services and prescription drug costs for the remainder of the calendar year

Phase Two: Meet your deductible

You pay 100% of negotiated / discounted, covered medical & prescription drug costs, until you meet your deductible

All covered medical & prescription drug costs are applied to your deductible

Annual Deductible: $1,200 - “You only” $2,400 - other coverage levels

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Eligibility

Enrolled in HDHP Employees must be

enrolled in the HDHP with HSA

Cannot be covered by any other medical option that is not a HDHP

MedicareIndian/Veterans coverage Spouse’s HMO/PPO Spouse’s general FSA

How the HSA Works

Funding

You & ConocoPhillips ConocoPhillips is

contributing $500 “You only” or $750 “other coverage levels”

You can contribute before-tax funds to your HSA through payroll deduction

Total 2011 contribution (yours & ConocoPhillips) can’t exceed the IRS maximum of $3,050 / $6,150

Over 55 – You can contribute an additional $1,000

Tax advantages

“Triple crown” federal tax savings

Tax deductible contributions

Tax-free earnings (current interest rate .40%)

Tax-free withdrawals when used for qualified medical expenses

Using the funds

It’s your money Pay for eligible health

care expenses directly from the account

Unused amounts roll over from year to year ― there’s no “use it or lose it” rule and no maximum account balance

The money is yours ― You own the “bank” account

You can take it with you when you leave or retire, unlike an FSA

Investment options when your balance reaches $2,000

Why is theHDHP offeredwithout HSA?

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New YBR Tools

Still considering the switch to the HDHP with HSA? Check out the new estimating and comparison tools on YBR.

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Medical Option Highlights (Network)

HDHP PPO EPO Traditional

2011 Increase 0% 17% 15% 30%

Monthly Costs AnnualizedIndividual/Family

$0 - $0 $1,152-$3,240 $1,380-$3,852 $1,812 - $5,064

HSA Company Contribution

$500 / $750 $0 $0 $0

DeductibleIndividual/Family

$1,200 (you only)$2,400 (you + more)

(includes all medical and prescription drug costs)

$500 (indiv.) $1,500(fam.)

$500 (individual)*$1,500 (family)*

$900 (indiv.)$2,700(fam.)

Out-of-pocket Maximum (includes deductible)Individual/Family

$4,000 (you only)$8,000 (you + more) 100% coverage thereafter

(includes all medical and prescription drug costs)

$3,000 (indiv.)$6,000 (fam.)100% coverage thereafter

No limit on out-of-pocket expenses

– which means your costs continue without ever hitting a maximum limit

$3,000 (indiv.)$6,000 (fam.)100% coverage thereafter

*Items new for 2011

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Medical Options Highlights (Network) continued …

HDHP PPO EPO Traditional

Network Networks are the same. Must use an Aetna Select Network provider or no benefits will be paid

No network. You can choose any doctor or facility

Preventive Medical Care

No deductible. Network services covered at 100%(annual wellness exam, mammogram, colonoscopy, etc.)

No deductible. Services covered at 100%.*

Physician Visits (non-preventive)

20% after deductible

$25 copay (PCP); $50 copay* (specialist)

$25 copay (PCP);$50 copay* (specialist)

20% after deductible

Outpatient Surgery 20% after deductible

$400 copay after deductible*

20% after deductible

Inpatient Hospitalization

20% after deductible $400 per day up to a $2,000 per admit maximum after deductible*

20% after deductible

Emergency Room 20% after deductible $150 copay after deductible*

20% after deductible

*Items new for 2011

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Other 2011 Benefit Changes (Medical)

Medical Changes 2010 2011

Dependent Requirements Restrictions on over age 19 dependents (tax dependents or students)

Children can be covered up to age 26

Penalty for not wearing a seatbelt or helmet in a motor vehicle accident

No Penalty Out-of-pocket maximums double for participants in the PPO, HDHP & Traditional medical options. Inpatient hospitalization per admission copay doubles for the EPO medical option.

New Health Management Administration

Aetna Healthways

New Health Savings Account (HSA) Aetna JP Morgan Chase

FSA and HSA Accounts Can purchase over-the-counter drugs

As a result of health care reform, can no longer use these accounts to purchase over-the-counter drugs without a prescription

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New in 2011! JPMorgan Chase (Chase) becomes direct administrator of Health Savings Accounts (HSAs)

Welcome Kit Includes one debit card

Deposit slip

Online access - www.chasehsa.com Need debit card to register

Order up to three additional debit cards for family members over 18 years of age

Balance and transactions

Online bill payment

Information on investment funds

Designate a beneficiary

No charge for 3 extra debit cards Free Checks – contact number on back of debit card

Can I get more than one HSA

card?

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Other 2011 Benefit Changes (Rx)

Prescription Drug Changes 2010 2011

Brand / Generic Drug Cost Difference – “Member Pays the Difference” Program

Member pays the difference in costs out-of-pocket

Difference no longer applies to: Deductibles Out-of-Pocket Maximums Preventive Rx Allowance ($1,500) Maximum Coinsurance

Out-of-pocket Maximum for Prescriptions

Mail Order Preferred and Retail Non-Preferred - $150 Mail Order Non-Preferred - $250

Mail Order Preferred and Retail Non-Preferred - $200 Mail Order Non-Preferred - $400

Diabetic testing meters and strips

Covered under medical & Rx benefits

Covered under Rx benefit

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Dental Option Changes 2010 2011

Preventive Dental Option N/A New option at $0 monthly cost to cover preventive dental services (exams, cleanings, x-rays etc.)

Annual Maximum and Orthodontia Lifetime Maximum

$1,500 $2,000

Aetna Dental DMO Employee concerns about shrinking network and dentist wait

Option eliminated due to employee concerns

Other 2011 Benefit Changes (Dental)

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Well-Being Assessment & Biometrics

Long-term strategy to increase participant awareness of health risks:

1. 2011 – Know your numbers: take a well-being assessment and four biometric screenings (blood pressure, cholesterol, body mass and blood sugar)

• Screenings at work locations or employee’s physician

• Employees will receive a $600 discount on 2012 annual premium costs ($50 per month)

2. 2012 – Take well-being assessment and biometric screenings and if at risk, take action to receive a discount on premium costs in 2013

3. 2013 - Take well-being assessment and biometric screenings and if at risk, take action and improve results: To the extent provided by law, employees are incentivized, through 2014 premium discounts, to show improvements

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U.S. Dependent Eligibility Verification

Background

2009 Communications resulted in a 4% drop in dependents resulting in an average annual savings of almost $5 million

Full dependent eligibility verification conducted by Hewitt; July 7 - August 6, 2010

Results and Next Steps

2010 Dependent eligibility verification resulted in an additional annual savings of $4.7 million

Beginning January 1, 2011: all dependents added for medical and dental coverage must provide documentation to support eligibility

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Where can I find out more?

ConocoPhillips Benefits Center

800-622-5501 or 718-354-1344,8 a.m. - 6 p.m. Central time, Monday - Friday

Login to YBR through HR Express

Online benefits information also available at http://hr.conocophillips.com (SPDs, Claim Forms, Benefit Highlights, DocFind, Preventive Care brochure and more)

HDHP blog (through HR Express)

2011 Benefits Changes & New Tools Blog (through HR Express)

Health Care Reform - www.healthcare.gov

Annual Enrollment Materials – Delivered on November 1, 2010

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Disclaimer

This presentation is intended to be accurate, but if there is any

discrepancy between these materials or the presentation and

the terms of the official plan documents, the official plan

documents will control. In addition, although ConocoPhillips

intends to continue these benefit plans indefinitely, the

company reserves the right to amend, change or terminate any

of these benefit plans or provisions at any time.

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