Your Health Benefits2016 Open Enrollment

October 2015

So why are we here?

• Sneak Peak for 2016 Open Enrollment • No major plan changes this year

• Minor feature changes

• Focus on Health Investment Plan Education• Focus on Health Investment Plan Education• Many employees are STILLmissing a significant

retirement savings opportunity – 75% vs. 23%

• New tools and resources to assist

• Check step to maximize HSA savings

• Upcoming changes for the 401k plan

What we are going to cover:

• 2016 Open Enrollment Updates

• What is the Health Investment Plan again?

• Why is this important to Teradyne & our employees?

• Why should you consider having an Health Savings Account?

• Real –life Scenarios• Real –life Scenarios

• What do you need to consider?

• Resources to make the decision and transition easier

• Questions?

2016 Open Enrollment UpdatesMedical Changes

– Overall, the cost trend is flat across all plans

– Slight changes in premiums depending on plan experience

– Health Investment Plan

• Embedded per member Out-of-Pocket Maximums: $3,350 Family: $ 6,750

• Maintenance medication not subject to deductible.

– Introduction of Castlight Tool for managing medical costs

Dental – 6.5% Increase – 6.5% Increase

– Enhancement: Implant coverage revised to be more inclusive – 50% up to the max

Vision– No increase and enhancement for separate contact fitting allowance and anti-

reflective lenses coating.

Supplemental Life Insurance moving to age banded rates

401k Fund line up & Fee Changes – See schedule for upcoming meetings

What do we offer for BCBS Medical Plans?

• Advantage EPO - 0.7% increase

• Highest premiums

• In network only

• Co-pay model

23%

14%63%

HIP

PPO

EPO

• Preferred PPO - 2.6% increase

• In-network and out-of-network coverage

• Co-insurance model

• Health Investment Plan (HIP) w/HSA - 5.2% decrease

Let us re-introduce you to:

Teradyne Health Investment Planwith a Health Savings Account with a Health Savings Account

(HSA)

1. Learn 2. Assess 3. Compare 4. Plan

From the Corner HR OfficeJoin the wave!

This year I am encouraging you to consider joining the wave. The “wave” consists of Teradyne

employees who have switched to the Health Investment Plan for their health insurance coverage. This

is the plan which features much lower monthly premiums out of your paycheck, and substantial annual

company contributions into a tax-deferred long term Health Savings Account you own for life. In return,

you accept higher deductibles. When it all nets out, we know based on actual claims data that more

than 75% of our employees would be better off financially in this plan.

It’s really the “wave of the future” for health plans in the United States, as well as at Teradyne. After a

major communications and education push last year, enrollment doubled in this plan. Plan participants

new and old are giving it quite positive reviews, almost all of whom are planning to stay in the plan for 2016.

I plan to re-enroll in the plan for my sixth consecutive year.

I highly encourage you to give this plan serious consideration. There are easy to use tools available forI highly encourage you to give this plan serious consideration. There are easy to use tools available for

you to review your past medical claims data, or model hypothetical health situations, and see how

much you would pay in this plan versus your current plan.

Also, please attend one of the employee information sessions coming soon to your site or via webex.

You will be glad you did.

On a related note, we are making several changes to the fund line up and fee structure for the 401k plan in

November which I am confident you will find advantageous. Please read the employee announcements

and check out the Brainshark on the Open Enrollment website highlighting this change or feel free to

contact the HR Service Center with any questions.

Regards,

Steve Fagerquist

Vice President, Human Resources

Why the big push AGAIN this year? – We ALL own the cost of health care

– Health care costs continue to drive significant cost

~$20M per year

– Current Health Investment Plan enrollment is 23% (compared to the market +30%) up from 8% last year

LEARN

(compared to the market +30%) up from 8% last year

– Remove lack of understanding as a barrier to

enrollment in the Health Investment Plan

Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan? Why should you consider the Health Investment Plan?

– Over 75% of our employees would have been financially better off in the Health Investment Plan

– An HSA really needs to be considered as part of your overall retirement strategy

• Projected $220,000 medical expenses in retirement

• The MOST tax advantaged savings vehicle

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• The MOST tax advantaged savings vehicle

– There are significant resources to assist you and educate you about the “rules” of the plan

– You’re missing a significant opportunity

• Don’t be paralyzed by fear or misunderstanding

• Learn about the plan, do the math and understand the true cost, risk & probability.

How to find out if the Health Investment Plan is for YOU1. Learn about the Plan

– Attend a presentation

– www.teradyne.com/benefits

– Fidelity HSA Brainshark

– Health Investment Videos

– Guidespark Videos

– Talk to someone in the plan

2. Compare Plans– Review plan comparison charts– Review plan comparison charts

– Understand how the plans function differently

3. Model your Costs– Castlight Health – Assess your costs

– Fidelity Health Plan Cost Modeling Tool

4. Plan for the Upcoming Year– Consider fully funding your HSA the first year

– Set up your HSA account

– Start thinking about becoming a health care consumer

What’s the Health Investment Plan?(formerly the Blue Care Elect Saver PPO with HSA)

Health Savings Account (HSA) administered by Fidelity

It’s a unique and powerful combination

Teradyne’s

Consumer Driven

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– Long term savings vehicle for medical expenses, invested similar to a 401k

– Individual brokerage account

– Pays for qualified medical expenses—for you, your spouse, and eligible dependents

– Triple taxed-advantaged benefits

– Teradyne contributes $650 for individuals and $1300 for indiv + 1 and family.

Consumer Driven

Health Plan (CDHP)

– Lower premium

– Slightly higher deductible

– Higher Out-of-pocket maximum

– Preventative Coverage at 100%

– Enrollment is required to open an HSA

partnered partnered partnered partnered

withwithwithwith

1. Unique Tax Savings Opportunity

Advantages of a Health Savings Account (HSA)

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2. HSA Balance grows over time

3. It belongs to you

Are you missing an opportunity?

Teradyne has a higher than average Savings Plan Participation:

88% of Teradyne employees participate in the 401k Savings Plan

>30% of Savings Plan Participants hit the annual contribution max ($18,000)

Annual contributions to an HSA are independent of what can be contributed to a 401k or Roth IRA.

Teradyne funds 50% of the annual deductible into employees HSA accounts

Think about your overall retirement strategy… Are you maximizing what is available to you?

First, contribute enough to your 401(k) to maximize the employer match

Next, consider contributing to the HSA up to the applicable limit, taking

would recommend the following….

Note: Consult a tax advisor for additional advice on how to maximize your contributions.

Next, consider contributing to the HSA up to the applicable limit, taking

advantage of the employer HSA contribution ($650/$1300)

Next, consider contributing more to your 401(k) up the maximum, $18,000 or

$24,000 if you will be age 50 or older by December 31.

If you still wish to save more, consider contributing to an IRA, individual

savings or brokerage account.

If you have an HSA… Are you STILLmissing an opportunity?

You’ve made the leap to join the plan, but are you taking the opportunity to invest your funds so your investment can grow tax free?

Of the individuals that have an HSA account:

Less than 10% are investing in moderate to aggressive fundsLess than 10% are investing in moderate to aggressive funds

Teradyne has higher population of Savers

56% are Savers / Semi Savers

vs 39% for Fidelity’s Book of Business

Pay for expenses out of pocket is you can plan the cash flow

Definitions:

Semi-Saver = Spends 10% to 35% of current year contributions

Saver = Spends 10% or less of current year contributions

How do I use this plan?

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* The Fidelity-sponsored 2014 HSA survey was conducted

by GfK Public Affairs & Corporate Communications from

April 30 to May 9, 2014, using GfK’s KnowledgePanel, a

nationally representative online panel composed of 1,247

U.S. adults who are age 25-65, have household income of

$25,000 or more, have primary or shared responsibility for

household financial decisions, and receive health care

benefits through their own or their spouse/partner’s

employer. Of these respondents, 332 self-identified as

being enrolled in an HSA-eligible health plan.

Why aren’t YOU in the Health Investment Plan?

I have NO idea how

much my actual health

care costs are in order

to see if it would make

financial sense for me…

It’s too much risk for my family.It’s too much risk for my family.It’s too much risk for my family.It’s too much risk for my family.What if something major happens? What if something major happens? What if something major happens? What if something major happens?

I want them to have high quality care.I want them to have high quality care.I want them to have high quality care.I want them to have high quality care.

It’s not a good plan if you have children.It’s not a good plan if you have children.It’s not a good plan if you have children.It’s not a good plan if you have children.

It’s just too much work to manage this plan…

I’ll have to pay too much

money out of pocket if

I have any usage…

Hypothetical Scenario – Regular Usage(Under Individual Coverage on Health Investment Plan)

• Medical Expenses– Routine Adult Physical – 100% Covered

– (2) Sick Visits - $320

– Dermatologist visit - $125

– MRI / Imaging - $475

• Employee Cost– 100% of the costs up to the

deductible ($1300) : $1,280

Total Cost: $1,280

Scenarios

– MRI / Imaging - $475

– (12) Tier II Prescriptions - $360

Total Medical Claims: $1,280

Total Cost: $1,280

STOP THE BUSDon’t forget about….

– Teradyne’s contribution to the employee HSA: + $650

– Premium Difference: + $639.36

TRUE Total Cost= $9.36 balance in HSA

Note: This scenario assumes the individual receives all of

standard wellness visits through out the year based on age

and gender, all of which are covered at 100%.

The same scenario under the

Advantage EPO plan would cost: $490

Hypothetical Broken Arm Scenario (Under Family Coverage on Health Investment Plan)

• Employee Cost– 100% of the costs up to the

deductible: $2,600

– 10% of the costs up to the out-of-pocket maximum: $1,457.50

Total Cost: $3,350.00

Scenarios

• Medical Expenses– Emergency Room Visit

– MRI / Imaging

– Surgical treatment of a broken arm Total Cost: $3,350.00 (Individual Out-of-Pocket Maximum embedded in Family Coverage)

STOP THE BUSDon’t forget about….

– Teradyne’s contribution to the employee HSA: + $1300

– Premium Difference: + $2026.08

TRUE Total Cost: $23.92

Note: This scenario assumes the all family members

receive all of their standard wellness visits through out the

year based on age and gender, all of which are covered at

100% under preventative.

The same scenario under the

Advantage EPO plan would cost: $300

– Surgical treatment of a broken arm(surgeon fee, operating room, anesthesia, other fees)

– Follow up office visits

Total Medical Claims: $17,175

The “True” Maximum Out of PocketOutside of monthly premiums, what is the most I could possibly spend in this plan?

Individual Family

Maximum Out of Pocket $3,350 $6,750

less - Teradyne’s Contribution to HSA

(TER funds 50% of the deductible)$650 $1,300

less - Annual Premium Difference

(compared to the EPO)($148.46 -$92.18) x 12 = $675.36 ($445.37 - $276.53) x 12 = $2,026.08

True Out-of-Pocket Maximum with $2,025 $3,423.92* *True Out-of-Pocket Maximum with

TER funding 50% of the deductible &

re-investing the premium difference

$2,025 $3,423.92

The “True” maximum out-of-pocket amount is what employees would need to earmark

in savings to insulate themselves 100% from the extremely low probability of a

catastrophic event . This would mean generating near $44,100 in medical claims.

This amount is similar to ~ 3.5 % contribution of 401k for the average employee salary,

Which can be entirely funded by HSA contributions on a pre-tax basis

* Assumes worse case scenario

(less than 2% of covered members have claims in this category)

* *

Need help figuring it all out?

We have resources to make it easier…

• Teradyne Open Enrollment Website:

www.teradyne.com/benefits

• Plan Comparisons and Summary Plan Descriptions

www.teradyne.com/benefits

• Castlight Health – Past care detail, cost & quality data• Castlight Health – Past care detail, cost & quality data

• Enhanced - Health Plan Cost Modeling Tool powered by

Fidelity

• Compare Cost Estimates: www.bcbsma.com – Under Find a Doctor

• Go to: www.401k.com (look under the Health Savings Account tile)

• Contact the HR Service Center

Phone: 978-370-3041 Email: hr.service.center@teradyne.com

NEW 2015: Introducing CastLight

• A new tool to provide a resource for assessing your past healthcare usage as well as researching cost and quality for future healthcare needs

• Available to all employees (& dependents) • Available to all employees (& dependents) regardless of which health plan they are enrolled in.

• Important to understand the strengths and weaknesses of the tool

Resources: Introducing CastLight

Understand your medical needs

Cost of Care

What do you need to consider?

• How do you plan to pay for medical expenses in retirement?

• Are you currently maximizing all of your tax-free savings plan contributions?

• What are your anticipated medical needs?

• Involve the other decision makers in your household.

• Research & understand the plans well before the two weeks of Open Enrollment

Appendix

Qualified medical expenses

What are they?

• Defined by the IRS

• Includes out-of-pocket expenses such as:– Health plan deductible and coinsurance

– Most medical care and services

– Dental and vision care– Dental and vision care

– Prescription drugs

– Medicare premiums

IRS Publication 502: Visit irs.gov/publications/p502 for a list of

• medical expenses that generally qualify for payment or reimbursement.