2004 H&W Changes

ALL LOCAL CHAIRMAN	February 2, 2004
BNSF NORTHLINES AND MRL	File: National Contract

Attached you will find a document detailing implementation of the changes to the BLE National Health and Welfare Plan. The information was provided by BNSF and is the timeline that they plan to work off of. Please distribute this information to those interested, we will forward any other information as it becomes available.

cc: BLE General Chairmen, BNSF
Steve Speagle, Assigned International Vice President, BLE
Jim Nelson, BLE Secretary Treasurer, BNSF/MRL GCA

Mr. Joseph Epstein
Director Employee Benefits
National Railway Labor Conference
1901 L Street, N.W., Suite 500
Washington, D.C. 20036

As a follow up to our discussion in Las Vegas, enclosed are the final communication materials that incorporate certain changes that were in the ratified agreement between the BLE and the NCCC. The changes are in the cover letter which reflect changes to the effective date of the life insurance and the vision benefits that were modified based on the agreement of the parties. For all other changes, an April 1, 2004 date has been utilized. This allows BLE members to make appropriate choices with the new benefit structure in determining whether or not they would choose to elect the opt-out provision as called for in the agreement.

The milestones associated with the implementation of the enclosed material are as follows:

Print and Mail Opt-Out Material Enrollment Period Enrollment Form Cut-off Date	Week of January 19 January 26 — February 20 February 23
Keying ID Cards Released	March 1 — March 12 March 1 — March 12

ROBERT F. ALLEN, CHAIRMAN                                                         ROBERT A. SCARDELLETTI, CHAIRMAN
NATIONAL CARRIERS’ CONFERENCE COMMITTEE                      HEALTH & WELFARE COMMITTEE
1901 L STREET, NW.                                                                           COOPERATING RAILWAY LABOR ORGANIZATIONS
SUITE 500                                                                                             3 RESEARCH PLACE
WASHINGTON, D.C. 20036-3514                                                        ROCKVILLE, MD 20850-3279

As a result of collective bargaining agreements between Railroad Management and the Brotherhood of
Locomotive Engineers, changes have been made to the benefits provided under the Railroad Employees
National Health and Welfare Plan (“Plan”). In addition, a new program, the Railroad Employees National
Cafeteria Program (“Program’), will be implemented to allow employees to opt-out of Foreign-to-Occupation and dependent coverage under the Plan.

Effective January 1,2004 Life insurance benefits have been increased from $10,000 to $20,000. Accidental Death and Dismemberment benefits have been increased from $8,000 to $16,000.

Effective February 1, 2004 Vision benefits have been changed from the “Select” plan to the “Standard” plan.

1. Employees and their dependents who live in an MMCP network area will be required to participate in MMCP. If you live “in-area” and have elected to be covered under the CHCB, your benefits will be changed to MMCP on April1st. For some, this will mean a change from United Healthcare to Aetna. The enrollment kit mailed to you recently tells you whether Aetna or United Healthcare administers MMCP in your area.

2. Under the CHCB, coverage has been added for an annual routine examination, including diagnostic testing and immunizations in connection with the exam, for each employee and dependent. Benefits will be 100% of charges up to $150 and 75% of any excess over $150.

3. Under the CHCB, coverage for routine childhood immunizations for Diphtheria, Pertussis or Tetanus (DPT), measles, mumps, rubella and polio has been extended from age 6 to age 18.

4. Under both the MMCP and CHCB, coverage has been added for speech therapy for children under age 3 when given for treatment of infantile autism, development delay, cerebral palsy, hearing impairment, or major congenital anomalies that affect speech.

5. Under both the MMCP and CHCB, coverage has been added for Phenylketonurial blood tests (PKU) for children under age 1.

6. Under both the MMCP and CHCB, coverage has been added for tests and examinations to diagnose the cause of hearing loss and charges for a hearing aid. Benefits are payable up to a $600 maximum each calendar year.

7. Under the MMCP, an office visit co-payment will be required only for the first visit for a pregnancy to an obstetrician or gynecologist. A co-payment was required for each office visit previously.

8. Under the MMCP, an office visit co-payment will no longer be required if the visit is solely for the administration of an allergy shot.

9. Under the MMCP, the individual out-of-network deductible will change from $100 per person, per year, to $200. The family out-of-network deductible will change from $300 to $600.

10. The co-payments for prescription drugs under the Managed Pharmacy Services Benefit will change:

For retail purchase in a drug store: from $2 to $5 for a generic drug
from $6 to $10 for a brand name drug

For mail order prescriptions: from $5 to $10 for a generic drug
from $5 to $15 for a brand name drug

If you certify that you have other health care coverage, you may opt out of employee health care coverage (other than for on-duty injuries) under the Plan or a Hospital Association of which you are a member, and dependent health care coverage under the Plan. If you opt-out, you will not be required to make a monthly contribution for health benefits and will, in most cases, be entitled to a $100 “opt-out bonus”

Details about the Program, are set forth in the enclosed “Important Questions and Answers About the Railroad Employees National Cafeteria Plan.” Also enclosed are an Election Form to be used if you wish to opt-out, Instructions as to completing the Form, HIPAA Authorization forms and a Revocation Form. If you wish to exercise this option, you must complete and return the required forms no later than February 20, 2004.

Please read all of the enclosed materials carefully. The choice is up to you. Neither the Plan, your union, nor your employer will bear any responsibility in connection with your decision.

If you do not wish to opt out of health benefits for the 2004 plan year, you do not need to read the following materials.

As a result of bargaining agreements between rail carriers represented by the National Carriers’ Conference Committee and your organization. A new program, the Railroad Employees National Cafeteria Program (the ”Program”), is being implemented to allow certain employees to reject health care coverage as described in this letter and the accompanying materials.

Under the Program, employees who participate in the Railroad Employees National Health and Welfare Plan (the “Plan” or “Health & Welfare Plan”) may opt out of (i) employee health care coverage (other than for on-duty injuries) under the Plan or a Hospital Association of which they are a member, and (ii) dependent health care coverage under the Plan, if such employees can certify that they have other health care coverage. See the Qs & As for more information about the Program.

The period for which coverage can be rejected starts on April 1, 2004 and extends through December 31, 2004.

If you elect to opt out of coverage, your choice will apply only to employee health care benefits (other than for on-duty injuries) and to all dependent health care benefits. You will remain covered under the Plan for health care benefits for on-duty injuries and for Life and Accidental Death and Dismemberment benefits. You and your dependents will also remain covered under the Railroad Employees National Dental Plan and under the Railroad Employees National Vision Plan.

If you choose to reject coverage, you will not have to make monthly contributions toward the cost of such coverage. In most cases, you will also receive a payment of$ 100 per month for every month your employing railroad is required to make a payment to the Plan for your Life and Accidental Death and Dismemberment benefits. See the Qs & As for additional information, including situations in which this bonus is not payable.

If you are married to a railroad employee who is also covered under the Plan or under the National Railway Carriers and United Transportation Union Health and Welfare Plan (the “NRC/UTU Plan”), or you are married to a railroad retiree who is also covered under the

Railroad Employees National Early Retirement Major Medical Benefit Plan, special rules apply to you. See the Qs & As for details.

If you reject coverage you cannot reinstate it until the next calendar year unless in the interim:

If any of these events occurs, you must notify UnitedHealthcare within thirty (30) days of the date of the event in order to reinstate your coverage.

If you wish to reject coverage under the Plan and your Hospital Association (if you are a Hospital Association member) complete and sign the enclosed Certification and Election Form and one copy of the HIPAA Authorization. You must return your Form and one copy of the HIPAA Authorization to UnitedHealthcare no later than February 20, 2004. The second copy of the HIPAA Authorization is for your records. Any Forms received with a postmark after that date will not be honored.

In addition to the HIPAA Authorization and the Certification and Election Form, we’ve enclosed Instructions for completing that Form, a Revocation Form, and a set of Qs & As containing pertinent additional information. Please read all of these enclosed materials carefully before deciding whether or not to reject Plan coverage. The choice is up to you. Neither the Plan, your union nor your employer will bear any responsibility in connection with your decision.

INSTRUCTIONS Regarding the
RAILROAD EMPLOYEES NATIONAL CAFETERIA PROGRAM
CERTIFICATION AND ELECTION FORM for the Period
April 1, 2004 through December 31, 2004 (the “2004 Program Year”)

You may complete and submit the Certification and Election Form (the “Form”) with respect to the 2004 Program Year only if you meet both of the following criteria:

(i) You have medical, mental health/substancc abuse, and prescription drug coverage for yourself and your dependents, if any, under a group health plan or health insurance policy other than the Railroad Employees National Health and Welfare Plan (the “H&W Plan”); and

(ii) Your spouse is not either (a) a railroad employee who is covered under the Plan or the National Railway Carriers and United Transportation Union Health and Welfare Plan, or (b) a railroad retiree who is covered under the Railroad Employees National Early Retirement Major Medical Benefit Plan.

If you do not meet both of these criteria, you will automatically be covered under the H & W Plan and you may not submit a Form to reject coverage with respect to the 2004 Program year.

If you are eligible to submit a Form because you have other health care coverage, you may elect to stay in the H&W Plan (the “Stay-In Option”) or to opt-out of the H&W Plan (the “Opt-Out Option”). If you do not submit a properly completed Form, you will be deemed to have elected the Stay-In Option. You should only complete and submit the Form if you wish to elect the Opt-Out Option.

The Stay-In Option is an election to receive employee health care coverage (other than for on-duty injuries) and/or dependent health care coverage under the H&W Plan, and employee health care coverage (other than for on-duty injuries) under any Hospital Association of which you are a member.

The Opt-Out Option is an election to opt Out of employee health care coverage (other than for on-duty injuries) and/or dependent health care coverage under the H&W Plan, and employee health care coverage (other than for on-duty injuries) under any Hospital Association of which you area member. If you choose the Opt-Out Option, you will receive a monthly bonus of $100 with respect to any month during which your employer would have been required to make a contribution to the H&W Plan for employee (other than on-duty) health care coverage for you and/or your dependents, if any, except that no bonus will be payable to you if you are on authorized leave under the Family and Medical Leave Act of 1993 on the date the bonus would otherwise be paid.

If you are electing the Opt-Out Option, you must check both Box 1 and Box 2 on the Form for your election to be effective.

By checking Box 1, you are certifying that, as of the date of certification, you have the health care coverage described in the text next to Box 1. You must also provide the name of the other group health plan or health insurance policy under which you have such coverage and the plan or policy number of that health plan or insurance policy. If such other coverage is COBRA continuation coverage, you should also check the “COBRA” box appearing under the name of the plan or insurer.

By checking Box 2, you are certifying that your spouse is not either (a) a railroad employee who is covered under the Plan or the National Railway Carriers and United Transportation Union Health and Welfare Plan, or (b) a railroad retiree who is covered under the Railroad Employees National Early Retirement Major Medical Benefit Plan.

THE CERTIFICATIONS CALLED FOR BY BOX 1 AND BOX 2 ARE VERY IMPORTANT. YOU MUST BE CERTAIN THAT YOU CAN TRUTHFULLY MAKE THE CERTIFICATIONS IN BOTH BOXES. NEITHER THE H&W PLAN,
THE CAFETERIA PROGRAM, THE UNION THAT REPRESENTS YOU, OR YOUR EMPLOYER IS IN ANY WAY RESPONSIBLE FOR YOUR CERTIFICATION AND CHOICE.

Important Questions and Answers about The Railroad Employees National Cafeteria Program

A. The Railroad Employees National Cafeteria Program (the “Cafeteria Program”) was established to implement the provisions of recently negotiated collective bargaining agreements.

Under the Cafeteria Program, employees can “opt-out” of employee “foreign-to-occupation” health care coverage (i.e., coverage other than for oh-duty injuries) and dependent health care coverage under the Railroad Employees National Health and Welfare Plan (the “Health & Welfare Plan”) if they have adequate alternative health care coverage for themselves and their dependents. Employees who exercise this option will not be required to make monthly pre-tax contributions (currently $79.74) to the Health & Welfare Plan and, in most cases, will receive an additional “opt-out” bonus of $100 per month.

A. To participate in the Cafeteria Program, you must be employed by a participating railroad carrier and represented by a participating union. In addition, you must have adequate alternative health care coverage for yourself and your dependents (see Q-3).

If you received an “opt-out packet” in your enrollment package you are eligible to participate.

If you meet these criteria, you will automatically become a participant in the Cafeteria Program. If you want to keep your coverage under the Health & Welfare Plan, you don’t need to do anything. But if you want to “opt out” of employee foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan, then you need to complete a Certification and Election Form and return it to UnitedHealthcare (see Q-4).

Q-3. What kind of alternative coverage do I need to have to “opt out” of coverage under the Health & Welfare Plan?

A. If you want to “opt out” of employee foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan, you must have medical, mental health/substance abuse and prescription drug coverage for yourself (except with respect to on-duty injuries) and your dependents under a group health plan or health insurance policy other than your coverage under the Health & Welfare Plan.

Example: Your spouse is enrolled in a group health plan provided by his or her employer that provides medical, mental health/substance abuse and prescription drug coverage for you, your spouse and your dependents. You are eligible to participate in the Cafeteria Program and “opt-out” of employee foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan. (See Q-14 for special rules that may apply where both you and your spouse are employed by participating railroads.)

A. You can “opt out” of foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan by completing a Certification and Election Form and a HIPAA Authorization and returning both forms to UnitedHealthcare no later than February 20, 2004. You should have received these forms and a pro-addressed return envelope with this Q&A material. If you did not, call UnitedHealthcare at 1-800-842-9905 to request forms. You must certify on the Certification and Election Form that you have the other coverage described in Q-3.

Q-5. What happens if I don’t return the Certification and Election Form and the HIPAA Authorization by February 20, 2004?

A. If you do not complete and sign both the Certification and Election Form and the HIPAA Authorization and return them to UnitedHealthcare by February .20, 2004, you will automatically be enrolled for employee foreign-to-occupation and dependent health care coverage in the Health & Welfare Plan.

Q-6. What benefits do I give up if I decide to “opt-out?’ of coverage under the Health & Welfare Plan?

A. If you decide to “opt-out” of coverage under the Health & Welfare Plan, then the Plan will not pay health care expenses for you (except with respect to on-duty injuries) or for your spouse or dependents. Therefore, before you decide to opt out, you need to carefully compare the benefits available under the Health & Welfare Plan and with those available under the other group plan or policy that covers you and your family to make sure you have adequate coverage for any injury or illness you or a family member might incur.

Q-7. Do I keep some benefits even if I reject foreign-to-occupation and dependent coverage under the Health & Welfare Plan?

A. Yes. Even if you opt out of employee foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan, you will still remain covered for:

Q-8. What do I get if! decide to “opt-out” of coverage under the Health & Welfare Plan?

A. If you decide to “opt-out” of coverage under the Health & Welfare Plan, you will receive additional take-home pay each month, for two reasons. First, you will not be required to make the employee contribution that is required for all employees who have employee foreign-to-occupation or dependent health care coverage under the Health & Welfare Plan. As a result, this amount will not be deducted from your wages. Second, in most cases, you will receive an additional taxable bonus of$100 per month (see Q-9).

Q-9. If I “opt-out” of coverage under the Health & Welfare Plan, will I receive the $100 bonus every month?

A. In general, if you “opt-out” of coverage under the Health & Welfare Plan, you will receive a taxable bonus of$ 100 per month in every month that the opt-out election is in effect if your employer is required to make a payment to the Plan in that month for your life and accidental death and dismemberment insurance. This payment is required if you rendered the Requisite Amount of Compensated Service or received the Requisite Amount of Vacation Pay (usually 7 days) in the prior month.

Q-10. If I decide to “opt-out” of coverage under the Health & Welfare Plan, how long will that decision be in effect?

A. Your election at this time is for the period from April 1, 2004 through December31, 2004. As of January 1, 2005, your coverage will be reinstated unless you “opt-out” of coverage for that year by completing and returning a new Certification and Election Form. (You will receive a Certification and Election Form for calendar year 2005 in October 2004).

Q-11. If! decide to “opt-out” of coverage under the Health & Welfare Plan, can I change my mind and enroll for that coverage before January 1, 2005?

A. In most cases, if you decide to “opt-out” of employee foreign-to-occupation and dependent health care coverage under the Health & Welfare Plan, you will not be permitted to change your mind and enroll for that coverage until January 1, 2005. But there are some important exceptions to this rule:

Example: You currently pay for COBRA continuation coverage for yourself and your dependents under a group health plan provided by your previous employer. Your coverage under that plan will be exhausted August 31. You will be permitted to change your opt-out election and enroll in the Health & Welfare Plan if you file a Revocation Form on or before September 30.

Example: You and your dependents are currently covered under a group health plan provided by your spouse’s employer. On August 31, your spouse’s employer reduces your spouse’s hours of employment, with the result that you, your spouse and your dependents are no longer eligible for coverage under that group health plan. You will be permitted to change your opt-out election and enroll in the Health & Welfare Plan if you file a Revocation Form on or before September 30.

Example You and your spouse are currently covered under a group health plan provided by your spouse’s employer, and you have no dependents. On August 31, a child is born to you and your spouse. You will be permitted to change your opt-out election and enroll in the Health & Welfare Plan if you file a Revocation Form on or before September 30.

Example: On August 31, you marry a person who has no tax dependents and who wasn’t a tax dependent of yours prior to the marriage. Your marriage is not an event that will entitle you to change your opt-out election.

Example: On August 31, you marry a person who has children who become your tax dependents as a result of your marriage. You will be permitted to change your opt-out election and enroll in the Health & Welfare Plan if you file a Revocation Form on or before September 30.

Q-12. How can I revoke my “opt-out” election and enroll in the Health & Welfare Plan before January 1, 2005?

A. If you are permitted to revoke your “opt-out” election and enroll for coverage in the Health & Welfare Plan before January 1, 2005, (see Q-11), you can exercise that option by completing a Revocation Form and returning it to UnitedHealthcare no later than 30 days after the event that permits you to revoke the “opt out” election. If you do not complete and return the Revocation Form within 30 days of this event, you will not be permitted to revoke your election.

You should have received a Revocation Form with this Q&A material. If you did not, call UnitedHealthcare at 1-800-842-9905 to request a form.

Q-13. If I revoke my “opt-out” election, when will I be enrolled in the Health & Welfare Plan?

A. In general, if you are permitted to revoke your “opt-out” election and enroll for coverage in the Health & Welfare Plan before January 1, 2005, (see Q-11), you will be enrolled for coverage on the first day of the calendar month after UnitedHealthcare receives your completed Revocation Form. For that reason, it is important to get your Revocation Form in to UnitedHealthcare as soon as possible.

Example: You, your spouse and your dependents are covered under a group health plan offered by your spouse’s employer. On August 31, that coverage terminates because your spouse is no longer eligible for it. You mail in the Revocation Form on September 3, and UnitedHealthcare receives it on September 5. You will be enrolled for foreign-to-occupation and dependent health insurance coverage in the Health & Welfare Plan beginning October 1.

Example: Same facts as above, except that you mail in the Revocation Form on September 29, and UnitedHealthcare receives it on October 1. You will be enrolled for foreign-to-occupation and dependent health insurance coverage in the Health & Welfare Plan beginning November 1.

If the reason that you are permitted to revoke your ‘opt-out” election is that you acquired a new tax dependent child through birth, adoption or placement for adoption, then the revocation will be retroactively effective to the first day of the calendar month in which that event occurred.

(Note that this retroactive coverage does not apply in the case of marriage.) As a result, you may be required to make a retroactive contribution to the Health & Welfare Plan and to refund any $100 “opt out” bonus that you received for that month. Any contributions and refunds will be deducted from your wages.

Example: You and your spouse are currently covered under a group health plan provided by your spouse’s employer, and you have no dependents. On August 15, a child is born to you and your spouse. On August 22, you receive a $100 “opt-out” bonus. On September 1, you mail in the Revocation Form to UnitedHealthcare. You will be retroactively enrolled in the Health & Welfare Plan for foreign-to-occupation and dependent health insurance coverage beginning August 1. As a result, you will be required to make a retroactive contribution to the Health & Welfare Plan for August, in addition to the regular contribution that you will be required to make for September. In addition, you will be required to refund the $100 “opt out” bonus that you received in August.

Q-14. My spouse is also a railroad employee and is covered under the Health & Welfare Plan (or the NRC/UTU Plan), or is a railroad retiree and is covered under ERMA. Can I still “opt-out” of coverage under the Health & Welfare Plan?

A. Under the Cafeteria Program, there are some special rules that apply when both you and your spouse are railroad employees who participate in the Health & Welfare Plan and/or the NRC/UTU Plan, or your spouse is a railroad retiree who participates in ERMA.

First, if you and your spouse are employees with dependent coverage under the Health & Welfare Plan and both f you are represented by one or more of the labor organizations participating in the National Cafeteria Plan, only the person whose birthday occurs earlier in the calendar year may “optout” of coverage under the Health & Welfare Plan.

Example: You and your spouse are both employed by participating railroads, and you are both represented by a participating labor organization. Your birthday is March 1, and your spouse’s birthday is April 1. You may “opt-out” of coverage under the Health & Welfare Plan, but your spouse may not. If you “opt- out”, the monthly contribution of $79.74 will not be deducted from your wages, but you will not receive the $100 per month bonus.

Second, if your spouse is employed by a participating railroad and has employee and/or dependent health care coverage under the Health & Welfare Plan or the NRC/UTU Plan (or has dependent coverage under ERMA), then you can “opt out” of coverage under the Health & Welfare Plan, but you will not receive the $100 per month “opt out” bonus. You will still receive additional take home pay if you “opt-out”, however, because you will not be required to make the monthly contribution to the Health & Welfare Plan that would otherwise be deducted from your wages.

Example: You and your spouse arc both employed by participating railroads. You are represented by a one labor organization, and your spouse is represented by another. Your spouse has foreign-to-occupation and dependent coverage under the NRC/UTU Plan. You can “opt-out” of foreign-to-occupation and dependent coverage under the Health & Welfare Plan, but you will not receive a $100 per month bonus for opting out. If you “opt-cut”, the monthly contribution of $79.74 will not be deducted from your wages.

As you know, where both spouses participate as employees in the Health & Welfare Plan, or one in the Health & Welfare Plan and one in the NRC/UTU Plan, or where one spouse is an employee participating in the Health & Welfare Plan. (or NRC/UTU Plan) and the other is a retiree participating in ERMA, certain favorable “make whole” Coordination of Benefits or “COB” rules apply. If the spouse participating as an employee in the Health & Welfare Plan elects to “opt-out”, these “make whole” COB rules will continue to apply just as if that “opt-out” election had not been made.

Q-15. I am covered by a Hospital Association and my .dependents are covered under the Health & Welfare Plan. Can I “opt-out” of-the Hospital Association but leave my dependents covered under the Health & Welfare Plan? Can I “opt-out” of dependent benefits but keep my coverage under the Hospital Association?

A. You must make one decision for your entire family. Your election to “opt-out” applies to your coverage under the Hospital Association and your dependent coverage under the Health & Welfare Plan. You cannot give up employee coverage only or dependent coverage only.

Q-16. If! “opt out” of coverage under the Health & Welfare Plan, will it affect my eligibility for coverage under ERMA when I retire?

A. No. For purposes of determining eligibility for ERMA, you will be treated as if you hadn’t “optedout.”

A. You can elect to opt-out of coverage. However, in making your decision you should understand that you are not required to make a payment for your coverage while you are not working, and if you do opt-out you would not be eligible for the $100 monthly bonus until you return to work (see Q-9).

If you do elect to opt-out, your benefits (other than for on-duty injuries) will end as of January 1st, even if you do not return to work (and be eligible for the bonus) until later in the year

Dennis R. Pierce		GENERAL COMMITTEE OF ADJUSTMENT BNSF/MRL	VICE CHAIRMEN M. 0. WILSON S. J. BRATKA D.W. MAY
General Chairman		801 CHERRY ST., SUITE 1010 Unit 8 FT. WORTH, TX 76102-4237 TEL (817) 338-9010 · FAX (817) 338-9088	J.H. NELSON SECRETARY-TREASURER GALESBURG, IL 61401