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Terms to Know

Balance Billing
When you go to an out of-network provider for medical and dental services, you may be responsible for the difference between the full cost (amount billed) and Reasonable and Customary (maximum amount paid) in addition to any coinsurance amounts.

Basic Dental Services
Routine dental procedures such as root canals and cavity fillings.

Cafeteria Plan
An employee benefit arrangement allowed by IRS Code Section 125, under which employees are allowed to pay for certain employee benefits on a pre-tax rather than an after-tax basis.

Coinsurance
A percentage of the cost of eligible medical expenses you are responsible for paying, after the deductible is met.

Copayment
A fixed dollar or percentage you pay each time you receive certain medical services – (i.e. office visits, prescription drugs).

Deductible
The amount of money you pay each plan year before the plan pays a benefit.

Elements of Compensation

Base Salary – Current annual salary excluding any variable pay.
Compensation – This definition is used to determine retirement benefits, in the
401(k) and defined benefit plan(s). It is defined as your current base salary plus current variable pay.
Total Compensation – This definition is used to determine pay based welfare benefits, such as life and disability insurance. It is defined as your current year’s base pay plus the prior year’s variable pay including incentive pay, commissions, overtime, intermittent pay, shift differential, retroactive pay adjustments, lump-sum merit pay, and business or performance-based bonuses.
Variable Pay - Includes incentive pay, commissions, overtime, intermittent pay, shift differential, retroactive pay adjustments, lump-sum merit pay, business or performance-based bonuses and salary continuation plans – e.g. sick pay.

Evidence of Insurability
Any statement of proof of a person’s physical condition affecting his/her acceptance for insurance.

Employer-Paid Benefits
A cost incurred by your employer for your health and welfare coverage, income protection, retirement benefit, social security / Medicare and taxes.

Eligible Charges
Charges for services that are covered under a benefit plan.

Flexible Spending Account (FSA) – Dependent Care
Allows employees to use pre tax dollars from their paychecks to pay for the cost of care for children or elderly dependents.

Flexible Spending Account (FSA) – Health Care
Allows employees to use pre tax dollars from their paychecks to pay for eligible medical expenses.

Flexible Spending Account (FSA) – Limited Purpose
Allows employees to use pre tax dollars from their paychecks to pay for the cost of eligible dental and vision expenses. You are only allowed to participate in this plan if you are enrolled in a High Deductible Health Plan (Consumer Choice PPO Plan).

Generic Drugs
Generic drugs have the same chemical make-up of a corresponding non-preferred brand drug whose patent has expired.

Health Coverage
Includes medical, dental, and vision.

Health Maintenance Organization (HMO)
An organization that provides pre-paid health benefits and most medical services through its network of facilities.

Health Savings Account (HSA)
A Health Savings Account is the vehicle that allows employees in a high deductible health plan (HDHP) to set aside tax-exempt contributions for current and future qualified medical expenses in an account made available through your employer or financial institution.

High Deductible Health Plan (HDHP)
An HDHP allows you to save money on your insurance premium in exchange for a higher deductible. When you are covered under a traditional medical plan, you pay a substantial monthly premium, whether you use the plan or not.

Income Protection
Includes long-term disability insurance and AFLAC. Some employers also offer short-term disability and sick pay.

Major Dental Services
Extensive dental procedures such as crowns, bridges and dentures.

Non-Preferred Brand Drugs
A medication that has been patented for name and chemical content. Once the patent expires, generic drugs with a different name but the same chemical make-up usually become available. Non-preferred brand drugs are all other prescription drugs that are not generic or on the list of Preferred drugs. The highest copay is charged for these drugs because they are either the most expensive and/or have a comparable drug that is either generic or on the preferred list.

Preferred Provider Organization (PPO)
An organization in which networks are created with Preferred Providers (Medical/ Dental professionals who have contracts with the organization to provide services at a discounted rate). Generally benefits will be greater and costs will be lower if the participant uses an in-network provider.

Pre-Existing Condition
A medical condition that could exclude you from receiving benefits associated with that condition for a defined period of time.

Preferred Drugs
These are prescription drugs that have been placed on a list of preferred drugs for a medical plan with a prescription copay. The copay for preferred drugs is generally less than non-preferred brand drugs but higher than a generic drug copay.

Pre-Tax Reimbursement Accounts
Consists of Flexible Spending Health Care Account, Flexible Spending Dependent Care Account, and Healthcare Savings Account. These accounts allow you to contribute money on a pre-tax basis for a specific purpose. This allows you to lower your taxable income by using tax-free money for allowable expenses. For a list of allowable expenses reference the IRS website, www.irs.gov, publication 502.

Preventive Dental Services
Routine services such as cleanings and checkups.

Qualified Status Change
An event that allows you to make coverage changes you could not otherwise make under a pre-tax plan as long as you make those changes within 31 days of the event – (i.e. birth of child, marriage, etc.).

Reasonable & Customary (R&C)
The average fee charged by a particular type of provider within a geographic area. Medical and Dental plans use this amount to determine the maximum amount they will pay for a service.

Retirement
Retirement benefits vary by District and date of hire. Refer to www.bcomplete.com for more about your benefits including planning for your retirement.

Defined Benefit Retirement Plan Formulas

Ninth District: 1.5% of your total Final Average Pay, multiplied by your Years of Benefit Service, plus 0.25% of the amount by which Final Average Pay exceeds Covered Compensation multiplied by Years of Benefit Service.
Northwest: 1.45% of your total Final Average Pay, multiplied by your Years of Benefit Service; plus 0.35% of the amount by which Final Average Pay exceeds one half of the average of the last 5 years of Social Security Taxable Wage Bases ($45,600 in 2008), multiplied by Years of Benefit Service.
7th District (Final Average Pay formula): 1.5% of your total Final Average Pay, multiplied by your Years of Benefit Service; plus 0.25% of the amount by which Final Average Pay exceeds Covered Compensation multiplied by Years of Benefit Service. (Different percentage applies for service prior to 1/1/94 for former 4th District retirement plan participants.)
7th District (Cash Balance formula): Annual Pay Credit added to account equal to 5 – 10%, depending on Years of Benefit Service, of eligible compensation. Additional Pay Credit equal to 5% of compensation in excess of Social Security Taxable Wage Base, if applicable ($102,000 in 2008)
11th District: 1.95% of total Final Average Pay, multiplied by Years of Benefit Service.

Defined Contribution/401(k) Plan Employer Contribution and Match Amounts

Hired on or after 1/1/07:

Fixed 3% Employer Contribution; plus
Dollar-for-dollar Employer Match on first 6% of combined employee pre-tax, post-tax, Roth after-tax contributions
Possible total Employer Contribution/Match = 9% of your compensation

Hired before 1/1/07 and a participant in Defined Benefit plan:

Dollar-for-dollar Employer Match on first 2% of combined employee pre-tax, post-tax, Roth after-tax contributions plus fifty cents on the dollar match for the next 4% of employee contributions
Possible total Employer Match of 4% of your compensation

Hired before 1/1/07 within former Consolidated group and not a participant in Defined Benefit plan:

Fixed 3% Employer Contribution; plus
Dollar-for-dollar Employer Match on first 6% of combined employee pre-tax, post-tax, Roth after-tax contributions; plus
5% Integrated Employer Contribution for eligible compensation in excess of the annual Social Security Taxable Wage Base ($102,000 in 2008)
Possible total Employer Contribution/Match = 9-14% of your compensation

Hired before 1/1/07 within USAgBank group and transferred Cash Balance benefit from 9th District DB plan to 401(k) plan:

Fixed 3% Employer Contribution; plus
Dollar-for-dollar Employer Match on first 6% of combined employee pre-tax, post-tax, Roth after-tax contributions; plus
Up to 3.50% Transition Credit depending on age and service on 9/30/07
1% Integrated Employer Contribution for eligible compensation in excess of the annual Social Security Taxable Wage Base ($102,000 in 2008)

Routine Care
Includes doctor visits, exams and other services for the purpose of monitoring a diagnosed condition.

Social Security / Medicare
An estimate of the cost for Social Security / Medicare calculated by multiplying your compensation up to $102,000 times 7.65% plus any eligible earnings above $102,000 times 1.45%. Other company paid benefits not shown include Worker’s Compensation Insurance and State and Federal Unemployment Taxes. If you would like to know more about Social Security benefits go to the Social Security Administration’s website at www.socialsecurity.gov.

Total Rewards
The total value of your benefits and pay, including total compensation, and employer-paid benefits (health and welfare & retirement benefits).

Welfare Coverage (Financial Protection for Your Survivors)
Includes life / Accidental Death & Dismemberment (AD&D) insurance.

Wellness Benefits
Certain services whose priority is the prevention and early detection of conditions. It does not include care or monitoring of an existing condition.

Chart from 2007 Total Rewards – for your reference.

Criteria used to Determine Employer Contributions	Hired after 1/1/2007 and no pension benefit (Defined Benefit Plan)	Hired before 1/1/2007 and participate in one of the following defined benefit plans	Hired before 1/1/2007 and no pension (defined benefit) plan
Criteria used to Determine Employer Contributions		- 7th Farm Credit District - Northwest FCS - Western Farm Credit District	- FCS of America - Northwest FCS - Western employers
Employer Matching Contribution on pre- or post-tax	$1 for $1 match on the first 6% of total compensation	$1 for $1 match up to the first 2%; 50 cents on the next 3-6% saved for a total match of 4%	$1 for $1 match on the first 6% of total compensation
Fixed Employer Contribution	3%	N/A	3%
Integrated Employer Contribution -- Qualified 401(k) Plan	N/A	N/A	3%
Integrated Employer Contribution – Non-Qualified Plan	N/A	N/A	2%

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