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Overview Key Program Features Turn-key program minimizes use of employer resources Contributions, earnings and reimbursements are tax-free (state income taxes may apply in certain states) Payroll tax savings of up to 7.65% on contributions Multiple plan designs available, including retiree-only and/or in-service withdrawals, vesting and our executive "premium only" feature Account balances can carry over from year to year Wide array of participant-directed investment fund options Employer Benefits Employer contributions fund the plan, and employer can set claim-eligibility requirements With some limitations, plans can be structured to benefit key employees Defined contributions to HealthSecure HRA can help reduce or eliminate long-term OPEB liabilities under GASB 43 and 45 Replaced defined benefit retiree medical plans with a defined contribution HealthSecure HRA program No limitations on amount of contributions made on behalf of employees May assist in collective bargaining (such as substituting in-service contributions for salary increases, providing a new, tax-free benefit for employees) Employee Benefits Tax-free contributions, earnings and withdrawals for qualified medical expense reimbursements Tax-free reimbursements cover employee, spouse and qualified dependents (state income taxes may apply in certain states) A means to prefund out-of-pocket family healthcare costs, including post-employment health insurance premiums Payroll tax savings of up to 7.65% on contributions Claims are easy to file; payments are processed daily Unused balances are available for continued use by spouse and tax qualified dependents after participant's death Tax-free Contribution Sources Mandatory leave cash-outs annually, at retirement and/or separation form service (e.g. annual leave, sick leave, vacation, personal, other) Mandatory employee contributions (e.g. exchange taxable wages such as future COLA or pay increase for tax-free HRA) Unused monthly benefit dollars provided by employer (only when benefit dollars are available solely for nontaxable benefits) Employer discretionary contributions The following tables show the tax savings the HealthSecure HRA provides on leave cash-outs and monthly contributions. HRA Leave Cash-out Tax Savings   Cash-out Amount 25% Income Tax 7.65% FICA Tax Net Amount Taxable wages $10,000 <$2,500> <$765> $6,735 HRA $10,000 N/A N/A $10,000 HRA saves $3,265 in taxes!1 Growth of $100 HRA Contribution Starting Age Monthly HRA Contribution Account Value at Age 652 25 $100 $148,856 35 $100 $81,870 45 $100 $40,746 55 $100 $15,499 Investment Options Employees can choose from among 13 investment options offered from four fund families through the HealthSecure HRA program. Tax-free Reimbursements Once a participant meets the employer’s defined plan requirements, claims can be filed to reimburse qualified out-of-pocket healthcare expenses and premiums. It’s easy to file a claim, and payments are processed daily and mailed weekly. 1 Tax savings are approximate. Assumes 25% federal income tax bracket and FICA taxes. 2 Based on average annualized net earnings of 5.00%. #40253 Securities and investment advisory services are offered by VALIC Financial Advisors, Inc., member FINRA and an SEC-registered investment advisor.