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Guide to 2011 Benefits Enrollment

for Active IBM Employees

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Whats InsideWelcome to Enrol lment for Your IBM Benefits

When Youre Ready to Enroll........................................................................................................4

Have You J ust Been Hired?..........................................................................................................5

Your IBM Health and Insurance Benefits

IBM Medical Options.....................................................................................................................6

IBM Dental Options......................................................................................................................11

IBM Vision Options.......................................................................................................................12

New Hire Healthy Living Rebate..................................................................................................13

Flexible Spending Accounts.........................................................................................................14

IBM Disability Benefits.................................................................................................................15

Other Benefits Available to IBMers..............................................................................................16

Administrat ive and Legal Information

Coverage for Dependents............................................................................................................18

About Medicare Coverage20

Transition of Care.........................................................................................................................20

No Coverage Credits....................................................................................................................20

Evidence of Insurability.................................................................................................................21

ID Cards........................................................................................................................................21

Qualified Status Changes.............................................................................................................21

Are You Join ing IBM as the Result of an Acquisit ion or StrategicOutsourcing Arrangement?

If so, you are receiving this information in advance of your date of hire so that you can familiarize yourselfwith IBMs broad array of health and related benefit programs. Your IBM Transition Manager willcommunicate the dates of your enrollment period as well as the availability of NetBenefits.

In the meantime, if you have questions or need more information, contact our dedicated transition supportspecialists at the IBM Employee Services Center at 800-426-2008. You may also contact your IBM

Transition Manager for assistance.

Please note: Depending on the terms and conditions of your acquisition or outsourcing agreement,

certain benefit provisions may differ from those described in this guide.

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Welcome to Enrollment for Your IBM BenefitsAs one of the nations leading employers and most health care-conscious large companies, IBM offers anarray of innovative health care options to employees. This is your opportunity to choose your medical,dental and vision coverage, sign up for a health-related rebate and tax-advantaged flexible spendingaccounts, and give thought to important disability protection.

IBM subsidizes employee health coverage at 100% under our core plan, well above the industry average.Our two no-cost medical options for employees and our programs supporting wellness and preventioncontribute to this, despite overall national cost increases for health care. A hallmark of our wellnessstrategy, IBMs Healthy Living Rebates, are available as a way to help employees manage their healthand that of their families.

At IBM, we know that investing in prevention and well-being makes sense for our employees and ourbusiness. Thats because healthy employees tend to experience better quality of life and higher personalproductivity. And those who receive regular care and discover health problems early tend to get wellfaster and spend less on medical care. Since 2006, IBM has provided 100% coverage for routinepreventive care.

IBM provides 100% coverage for in-network primary care under the IBM PPO, IBM PPO Plus and IBM

Exclusive Provider Organization (EPO) options. Under the IBM High Deductible PPO with Health SavingsAccount, in-network primary care is covered at 100% after the deductible. Primary care physicians includegeneral practitioners, internists, family practitioners, pediatricians, geriatricians and primary osteopathicphysicians. This 100% coverage lowers your out-of-pocket costs for care by eliminating the coinsuranceyou would otherwise pay any time you or your covered family member receive care from an in-networkprimary care doctor. (Keep in mind that the doctor may perform tests or request other services (e.g., lab)that will have a separate charge that may be subject to the deductible and applicable coinsurance.)

IBM pays the full cost of coverage for employees (contributions are required for dependents) who opt forthe IBM Preferred Provider Organization (PPO) or the IBM High Deductible PPO with Health SavingsAccount (HSA) plans. As in the past, for those who enroll in an IBM medical option (not including HMOs),the company covers nearly all costs for routine checkups and preventive services received in-networkand deductible-free coverage out-of-network, making it easy to keep current with ongoing tests and

screenings that can help head off problems in the future.

Our prescription drug program is designed to save on your out-of-pocket costs when you choose genericdrugs over brand name drugs. Spiraling increases in prescription drug costs nationwide indicate that ashift to generics is an effective way for all of us to help manage brand name prescription drug use.

As you make your benefit choices, choose the options that best match your needs, sign up for anincentive that can reward you for taking an active role in your health (if applicable), and participate in thesavings protection plan and tax-advantaged accounts IBM offers to help you maximize your benefitdollars.

For More InformationA brief description of your IBM health and insurance benefits appears in this guide. For detailed

information, please refer to the Health & Insurance tab of NetBenefits

or your Personal Fact Sheet if you receive enrollment

materials by mail, which show your available options and costs your Health Benefit Comparison Charts for detailed coverage information about your IBM medical and

dental options About Your Benefits: Health Care, the IBM Summary Plan Description available in the Reference

Library on NetBenefits, for detailed information on dependent eligibility, covered services andexclusions for all of your IBM benefit plans

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When Youre Ready to EnrollYou can enroll or make changes to your coverage quickly and easily online via NetBenefits:1. Log on to www.netbenefits.com.2. On the Health & Insurance tab, select Get Started to begin your enrollment.3. When youre satisfied with your elections, select the Save Your Benefit s link on the Benefit Elections

page. Note: Your elections will not be saved unless you select the Save Your Benefit s link.The

elections listed will be recorded as your new coverage. A confirmation screen will display. Make noteof the confirmation number and print the page for your records. The confirmation screen will alsodirect you to any follow-up activities to complete your enrollment.

If you dont have Internet access, call the IBM Employee Services Center at 800-796-9876 to speak witha service representative on business days (excluding holidays recognized by the New York StockExchange) between 8:30 a.m. and 8:30 p.m. Eastern time.

Special Service Numbers

Deaf and Hard of Hearing Access: 800-426-6537, available on business days (excludingholidays recognized by the New York Stock Exchange) between 8:30 a.m. and 6 p.m.,Eastern time.

Overseas Access: Dial your countrys toll-free AT&T Directaccess number, then enter

800-796-9876. In the U.S., call 800-331-1140 to obtain AT&T Direct access numbers. From

anywhere in the world, access numbers are available online at www.att.com/traveler or from

your local operator.

Confirmation of Your Benefits

If you make changes to your benefits, you will receive an e-mail confirming the date and time yousuccessfully completed your enrollment, along with a confirmation number and a link to NetBenefits. Ifyou do not have an e-mail address on record, you will receive a confirmation statement in the mailafter you complete your enrollment.

If you do not make changes, your Personal Fact Sheet will serve as the confirmation of yourbenefits. You will not receive a separate confirmation statement in the mail.

Social Security Numbers Required for Employees and DependentsIBM requires Social Security numbers be provided for all employees and dependents covered under IBMmedical plans for plan administration, and to ensure IBM meets its obligation to report Social Securitynumbers for all individuals covered under IBM medical plans to the Centers for Medicare & MedicaidServices (CMS), an agency of the federal government. IBM remains committed to protecting the privacy andconfidentiality of information and has established measures designed to meet privacy-related requirementsand expectations. For more information, view IBMs privacy policy, available in the Reference Library.

You must provide a Social Security number for you and all your covered dependents at the time you enroll.If any of your covered dependents do not have a valid Social Security number on record at IBM, you must

provide this information when you enroll. If you need to provide a Social Security number for a dependentwho is already enrolled, select the Update link next to the dependents name on the Review Dependentspage, then enter your dependents Social Security number. You may also call the IBM Employee ServicesCenter to provide Social Security numbers for your enrolled dependents.

IBM understands that Foreign Nationals may not have Social Security numbers issued to them; if one ofyour dependents is a Foreign National and does not have a Social Security number, you must call the IBMEmployee Services Center to document his/her status.

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Have You Just Been Hired?

Your IBM Benefits as a New HireAs a newly hired regular employee, you are eligible to enroll in the following IBM health and insurancebenefit plans: Medical Dental Vision New Hire Healthy Living Rebate Health Care Spending Account Dependent Care Spending Account Long-term Disability

This guide provides details about available options and plan provisions for each of these benefits.Review your Personal Fact Sheet or your Benefits Election page on NetBenefits for coverage levels andcosts.

Addi tional IBM Benefi tsYou are also eligible for IBM Shor t-term Disabili ty (STD) Income benefits as of your first day of work.

The STD plan provides benefits if you are unable to work due to illness, accident or injury. This coverageis fully paid by IBM. You do not need to elect this coverage; all eligible employees are automaticallycovered.

If you choose to participate in the IBM 401(k) Plus Plan, during the annual enrollment period (typicallyheld each fall) youll have the opportunity to purchase insurance that continues contributions should youbecome disabled and qualify for IBMs long-term disability benefits. (Note: Enrollment in this plan is onlyavailable during annual enrollment.) For information on this401(k) Disability Protection program, seepage 15.

To support your health and income protection needs, IBM also offers access toadditional lifeinsurance, as well as long-term care insurance, for you and your family. If you wish to participate inthese benefits, you must contact the benefit administrators of the plans directly; you will not be able to

enroll in Group Universal Life or the IBM Long-term Care Plan on NetBenefits or through the IBMEmployee Services Center. See page 16 of this guide for more information about these plans, includingcontact information for the benefits administrators.

Please note: Long-term Supplemental employees are not eligible for the following programs: Group LifeInsurance, Short-term and Long-term Disability Insurance, 401(k) Disability Protection, Healthy LivingRebates, Long-term Care Insurance, MoneySmart and IBM Special Care for Children.

Important: Information on Dependent Eligibility Confirmation ProcessAs a newly hired employee, you will need to provide proof of eligibility for each of your dependents toBudco, IBMs dependent eligibility administrator, if you choose to cover your spouse/domestic partner orchildren under any IBM medical, dental or vision options. You will receive a dependent verification

package at your home address with detailed information about the requirements for proof of eligibility. Ifyou do not submit adequate documentation confirming your dependents eligibility for coverage, thatdependent will be removed from coverage. P lease contact the IBM Dependent Eligibility ConfirmationHelp Line if you have questions about providing proof of your dependents eligibility at 800-204-4IBM(800-204-4426) 9 a.m. to 6 p.m., Eastern time, Monday through Friday.

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Your IBM Health and Insurance Benefits

IBM Medical OptionsAll of your medical options (except HMOs, if available) are administered by a regional health plan

administrator. Your Personal Fact Sheet shows the plan administrator in your area.You can choose from the following options: IBM PPO IBM PPO Plus IBM Exclusive Provider Organization IBM High Deductible PPO with Health Savings Account (HSA) HMOs, if available in your area No Coverage

Out-of-Area OptionsIf you live outside the network coverage area, youll be able to enroll in an Out-of-Area (OOA) option forthe IBM PPO, IBM PPO Plus and the IBM High Deductible PPO with HSA. Your Personal Fact Sheet willindicate whether you are eligible for Out-of-Area options.

About the Live/Work RuleIn certain cases, different health plan networks may be available at your work and home locations, andyou may be eligible to enroll in the plan available in your work location. This is known as the Live/WorkRule. If you choose to enroll in the plan that is available in your work location, you and any familymembers you cover must receive care from providers who are members of your work locations healthplan network to receive in-network benefits. (Note: Your work location is considered to be your workaddress as shown in BluePages.)

If you want to enroll in the plan available in your work location, you must call the IBM Employee ServicesCenter; enrollment in a work location plan is not available via NetBenefits.

Health Savings Account (HSA) Contribution Limits for 2011

If you enroll in the IBM High Deductible PPO with Health Savings Account and receive the full IBM HealthSavings Account contribution of $500, you may contribute up to $2,550 to a Health Savings Account in2011 and $5,650 if more than one individual is enrolled, according to Internal Revenue Service (IRS)rules governing health savings accounts. If you do not receive all or a part of IBMs $500 contribution for2011, you may contribute that portion of your own money (using tax-deductible after-tax dollars), up to amaximum of $3,050 ($6,150 if more than one individual is enrolled). If you are between the ages of 55and 65, you can make an additional catch-up contribution of up to $1,000 in 2011. You may contributeup to the annual maximum amount, even if you are not enrolled in the IBM High Deductible PPO withHealth Savings Account for the full calendar year.

You may enroll ineithera Health Savings Account or the Health Care Spending Account.

More information about Health Savings Accounts is available on the following page. You may also refer to

the Health Savings Account section ofAbout Your Benefits: Health Care (the Summary Plan Description)or the 2011 Health Savings Account Participant Information for Active Employees document, bothavailable in the Reference Library on NetBenefits.

If You Choose No CoverageChoose the No Coverage option only if you do not want IBM medical coverage including prescriptiondrug coverage. If you decline coverage, you can enroll again during the next enrollment period, typicallyheld each fall, or if you experience a qualified status change during the year.

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Thinking about enroll ing in the Health Savings Account?A Health Savings Account gives you the flexibility to pay for current eligible expenses or save forfuture health care needs. Unlike a Health Care Spending Account, funds you do not use remaininvested and roll over from year to year, so your account can grow over time. Whats more,interest and investment earnings are not subject to federal taxes.

You can use Health Savings Account funds to pay for your share of eligible medical expenses(e.g., deductibles, coinsurance and copayments) as well as laser eye surgery, hearing aids andbatteries, and acupuncture and other qualified medical expenses, as determined by the IRS.Other eligible expenses include long-term care insurance premiums (up to certain limits) andCOBRA and Medicare premiums.

IBM will contribute up to $500, in semi-annual payments, to those who open or maintain a HealthSavings Account for 2011. Youll be eligible to receive

$250 if you participate in the Health Savings Account between J an. 1, 2011 and June 30,2011, are enrolled, have opened a Health Savings Account with the designated trustee andare on IBMs active payroll on J une 30, 2011

$250 if you participate between J uly 1, 2011 and Dec. 31, 2011, are enrolled, have opened aHealth Savings Account with the designated trustee and are on IBMs active payroll on Dec.31, 2011

What to do:

1. Select the IBM High Deductible PPO with Health Savings Account as your medical option.Keep in mind that federal guidelines do not permit you to contribute to a Health SavingsAccount if your spouse covers you or any eligible dependents under a different health plan orif you or your spouse participates in a Health Care Spending Account.

2. Open your Health Savings Account with the trustee who administers the Health Savings

Account for your health plan. To receive the first of IBMs semi-annual contributions, youllneed to open your Health Savings Account no later than June 30, 2011. (Note: IBM will notmake a retroactive contribution for participants who open their Health Savings Account afterthis date.) Contact your plans trustee directly if you have questions.

You may be offered investment options for your Health Savings Account funds. Direct allquestions about interest and/or investment gains and losses to the bank or other sponsoringinstitution. Keep in mind that all investments have some degree of risk and participants aresolely responsib le for any investment elections they make. IBM assumes no responsib ilityor liability for participants investment elections.

Your Health Savings Account is a separate account and is not an IBM-sponsored benefit plan.You are solely responsible for understanding and following any rules governing Health Savings

Accounts and how contributions may be used. If you have questions about Health SavingsAccounts, contact a tax or financial consultant or review the 2011 Health Savings AccountParticipant Information for Active Employees document orAbout Your Benefits: Health Care,available in the Reference Library on NetBenefits and the Legal Notices page of w3.

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100% Coverage for Primary CareCare provided by your in-network primary care physician is covered at 100% under the IBM PPO, IBMPPO Plus and IBM Exclusive Provider Organization (EPO) options. Under the IBM High Deductible PPOwith Health Savings Account, in-network primary care is covered at 100% after the deductible is satisfied.Primary care physicians include general practitioners, internists, family practitioners, pediatricians andprimary osteopaths. This lowers your out-of-pocket costs for care by eliminating the coinsurance you

would otherwise pay any time you or your covered family member receive care from an in-networkprimary care doctor. Keep in mind that the doctor may perform tests or request other services (e.g., lab)that will have a separate charge that may be subject to the deductible and applicable coinsurance.

If You Will Be Enrol ling in an HMO* and Selecting a Primary Care ProviderYou have the right to designate any primary care provider who participates in a health plans network andwho is available to accept you or your family members. You may designate a pediatrician as the primarycare provider for your child(ren). If you do not designate a primary care provider or your designation is nolonger valid, the HMO may designate a primary care provider for you. If so, your primary care provider willbe the person assigned to you by the HMO until you make a designation.

You do not need prior authorization from the HMO or from any other person (including a primary careprovider) in order to obtain access to obstetrical or gynecological care from a health care professional inthe network who specializes in obstetrics or gynecology. The health care professional, however, may berequired to comply with certain procedures, including obtaining prior authorization for certain services,following a pre-approved treatment plan, or procedures for making referrals. For a list of participatinghealth care professionals who specialize in obstetrics or gynecology, contact the HMO administratordirectly.

*Please note: These provisions do not apply to HealthAmerica PA (HMO) and Pacificare Northern CA (HMO)becausethey are grandfathered health plans.

Coverage for Nutritional CounselingIBM medical plans provide the following coverage for nutritional counseling provided by registereddieticians and licensed nutritionists:Up to two visits per year for those who do not have a chronic medical condition, orUp to four visits per year for those who have a chronic medical condition

Mental Health/Substance Abuse CoverageThe administrator for your mental health/substance abuse benefits depends on your medical option asshown in the table below. Please refer to theHealth Benefit Comparison Charts or your Health PlanDetail Sheets for coverage information.

Medical Option Mental Health/Substance AbuseAdminist rator

IBM PPO (including Out-of-Area options)

IBM PPO Plus (including Out-of-Area options)

IBM Exclusive Provider Organization

IBM High Deductible PPO with HSA

OptumHealth Behavioral Solutions by UnitedBehavioral Health, under the

IBM Managed Mental Health Care Program

IBM EPO HealthPartners

HMOsYour health plan or HMO

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Prescription Drug CoverageThe administrator for your prescription drug benefits depends on your medical option, as shown in thetable below. Please refer to the Health Benefit Comparison Charts or your Health Plan Detail Sheets forcoverage information.

Medical Option Prescription Drug Administrator

IBM PPO (including Out-of-Area options)IBM PPO Plus (including Out-of-Area options)

IBM Exclusive Provider Organization

IBM EPO HealthPartners

IBM High Deductible PPO with HSA

Medco, under the

IBM Managed Pharmacy Program

HMOs HMO

IBM Managed Pharmacy ProgramThe IBM Managed Pharmacy Program is available to those whose prescription drug coverage isadministered by Medco. Coverage for Short-Term Medication: You can use retail pharmacies for medication such as an

antibiotic for a sudden illness for up to a 30-day supply. Youll save money if you use a pharmacy

that participates in Medcos network. Coverage for Long-Term Medication: If you are taking medication for a chronic condition such as

high blood pressure, you will receive benefits for a 30-day supply at a retail pharmacy (plus up to tworefills) for the initial prescription only. Subsequent refills must be ordered through the MedcoPharmacy (mail order service) or youll pay the entire cost for the refill at the retail pharmacy.

If Your Medication Requires Special Handling: If you need covered prescription medication thatrequires special handling or administration such as chemotherapy and are currently receiving itthrough your doctors office or other treatment center, you can order it through Accredo, the Medcospecial care pharmacy. By ordering covered prescription medication this way, you may pay less for itoverall. Additionally, you may be able to have it shipped directly to you or your doctors office at noadditional charge. Contact Medco Member Services for more details.

GenericsAdvantage

If a generic equivalent (identical active ingredient) is available and you choose a brand name drug insteadfor a new prescription, you will pay the full* generic coinsurance plus the difference in cost between thegeneric and brand name drug. (*Note: The per prescription maximum will not apply as it usually would forMedco participating pharmacies and mail order prescriptions.)

However, if your physician validates it is clinically indicated for you to use the brand name drug, you willonly pay the usual brand name coinsurance (and not the difference in cost).

Under GenericsAdvantage, in those few cases where a particular brand name drug is comparably pricedwith a generic in the same class of drugs, prior authorization will not be required for thatbrand drug. Priorauthorization will be required for other brand name drugs in that class; otherwise, they will not becovered.

Specialty MedicationsIf you require a new prescription for a specialty medication, your doctor will first need to contact a Medcopharmacist for authorization to confirm that the treatment complies with standard clinical guidelines. Thisrequirement will help ensure that you receive the proper drug, dose and treatment based on yourdiagnosis.

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IBM Dental OptionsYou may choose from the following dental options: IBM Dental Basic IBM Dental Plus CIGNA DMA

All dental options provide coverage for preventive, diagnostic and basic restorative care; some optionsalso provide coverage for major restorative care and/or orthodontia. A pretreatment estimate may berequired for certain services.

Refer to the dental section of the Health BenefitComparison Charts for coverage details. If you havequestions about reimbursement for eligible services or to locate a network provider, contact MetLifedirectly at 800-872-6963 or log on to www.metlife.com/MyBenefits. For coverage details and contactinformation for the CIGNA DMA, please refer to the plans Health Plan Detail Sheet.

More details on the IBM Dental Plans can be found in the Summary Plan Description available in theReference Library on NetBenefits and on w3; you may also request a copy by calling the IBM EmployeeServices Center.

Get a Pretreatment EstimateIf you are enrolled in a dental option other than the CIGNA DMA and your dentist recommends adental procedure that exceeds $200, you should request a pretreatment estimate from MetLifebefore the procedure is performed. MetLife will review your dentists treatment plan to determinethe eligibility of the treatment and whether its the most appropriate and cost-effective treatmentfor your condition. MetLife will then inform you and your dentist of the amount that will bereimbursed for the procedure. During the review, MetLife may determine a more cost-effectivetreatment is sufficient and appropriate. If so, your benefits will be based on that alternativetreatment. You and your dentist may still choose the more costly procedure, but you will beresponsible for the difference in charges. This applies even when you dont get a pretreatmentestimate.

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IBM Vision OptionsYou may choose one of the following vision options:

IBM Vision PlanThis option provides benefits for an annual eye exam; one pair of glasses or contact lenses andeyewear both within and outside the VSP network, along with the same discounts offered by the VSP

Vision Card.

VSP Vision CardThis free vision discount card lets you save money on eye exams, eyewear and other vision careservices from VSP network providers.

If you have questions about available discounts or benefits under the IBM Vision Plan or VSP VisionCard, or to locate a provider in the VSP network, contact VSP directly at 888-877-4426 or log on towww.vsp.com/ibm.

IBM Vision Plan

In-Network Out-of-NetworkVSP Vision Card

Annual Eye Exam Plan pays full eligible

charge

Up to $35 20% discount on VSP

providers feeLenses Plan pays full eligible

charge; certain lensoptions not included

Single vision: up to $25Bifocal: up to $40

Trifocal: up to $55Lenticular: up to $80

Frames Plan pays up to $120 forcertain frames; you maypay a portion for others

Up to $35

20% discount off theretail price on completepairs of prescriptionglasses, including avariety of lens options

Contact Lenses Elective: up to $120Medically Necessary: nocharge with priorapproval

Elective: up to $105Medically Necessary: upto $165

15% discount on VSPproviders fee for contactlens exams (fitting andevaluation services).Discounts are not

available for contactlenses.Laser VisionCorrection Surgery

No benefit coverage butsavings may beavailable for LASIK orPRK surgery; contactVSP for details

Not applicable On average, 15%discount available

Eligible Providers Contact VSP or visitwww.vsp.com/ibm for alist of providers in yourarea

See any provider Contact VSP or visitwww.vsp.com/ibm for alist of providers in yourarea

Filing Claims Providers file claims onyour behalf

You pay for serviceswhen received, then

submit the bill to VSPfor reimbursement

No claims to file;discounts are provided

at time of purchase orservice

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New Hire Healthy Living RebateInvesting in prevention and well-being makes sense for our employees and our business because healthyemployees tend to experience better quality of life and higher personal productivity. Those who discoverhealth problems early tend to get well faster and spend less time and money on medical care.

IBM offers a New Hire Healthy Living Rebate to encourage and support newly hired employees who want

to take steps to identify their preventive care needs and personal health risks.

Program RequirementsTo receive the $150 New Hire Healthy Living Rebate, employees must sign up during their initial benefitsenrollment by indicating Will Participate for the New Hire Healthy Living Rebate program. You thencomplete the online program by December 31, 2011.

The online program is available on the Health Management Center, provided by WebMD for IBM,accessible through NetBenefits. You will be guided through: Completion of the online Health Risk Assessment. Creation of the online Personal Health Record. Accessing IBMs Wellness for Life Web site to learn which wellness tools may be valuable for you.

If you elect to participate in this rebate program, youll receive an email after your benefits enrollmentperiod ends with detailed information about program requirements and how to get started. If you are hiredlate in the year, you may log on to the Wellness for Life Web site (www.wellnessforlifecenter.com) beforeyou receive this informational email so that you can complete all program steps by the December 31,2011 deadline.

After successfully completing the program requirements, please allow six weeks for the rebate payment toappear in your paycheck. The rebate will be treated as taxable income.

The Health Risk Assessment: An Important First StepPrevention is about understanding your health risks how your age, gender and medical historycontribute to your overall health profile or put you at risk for conditions like heart disease, depression anddiabetes. Specific medical indicators (like blood pressure and weight) and lifestyle behaviors (like diet,

seat belt use and physical activity level) sharpen the health risk picture. And once you know more, youcan put your knowledge and other preventive tools to work.

Your Personal Health Record : Helping You Make Wise Health DecisionsOne of the keys to making wise health care decisions is having easy access to information. The onlinePersonal Health Record can help by providing a single location to consolidate and organize medicalinformation from multiple sources. You can include information about immunizations, allergies,medications, surgeries, lab results, provider information and much more.

During the annual enrollment period, usually held each fall, you may be offered other Healthy LivingRebate programs for the following plan year. These programs are designed to encourage and supportthose who want to adopt or maintain healthy lifestyles and are available to regular active employees. Yourspouse/domestic partner and other dependents are not eligible to participate.

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Flexible Spending AccountsFlexible Spending Accounts let you use tax-free dollars to pay for unreimbursed eligible health care anddependent care expenses. Your contributions to a Health Care and/or a Dependent Care SpendingAccount are deducted from your pay on a before-tax basis each pay period. This lowers your taxableincome so you pay less in taxes. Throughout the year, you may submit claims to your account(s) andreceive reimbursement without paying taxes on the reimbursement amount.

Participation in the Health Care and Dependent Care Spending Account is optional; however, if you wantto participate, you must enroll and choose an annual contribution amount.

Health Care Spending Account: up to $5,100 (minimum election of $10 per month)

Dependent Care Spending Account: up to $5,000 (minimum election of $20 per month) Note: Ifyour spouse participates in a Dependent Care Spending Account, you may contribute a combinedtotal of $5,000 each year.

Health Debit CardIf you participate in the Health Care Spending Account, you will receive a Health Debit Card. The HealthDebit Card program is administered by Acclaris, the administrator for IBMs Flexible Spending Accounts.

The Health Debit Card enables you to pay your portion of the cost of eligible prescription drugs throughautomatic deduction from your Health Care Spending Account.

When you use the Health Debit Card at a participating Medco retail pharmacy or through Medcos mailorder service, your Health Care Spending Account is debited for your coinsurance amount when youpurchase prescription drugs. Using the Health Debit Card eliminates the need for you to file claims toreceive reimbursement for these eligible expenses.

You will receive your Health Debit Card from Acclaris, along with activation instructions, two to threeweeks after you complete your enrollment.

For more information about the Health Care Spending Account and Dependent Care Spending Account,

refer to the following Summary Plan Descriptions available in theReference Library on NetBenefits: About Your Benefits: Health Care About Your Benefits: Work and Personal Life Balancing

You Can Choose a Health Care Spending Account OR a Health Savings Account ButNot BothIf you want to enroll in the Health Care Spending Account, youll need to choose a medical optionother than the IBM High Deductible PPO with Health Savings Account. Based on IRS regulations,you may not enroll in both a Health Care Spending Account and a Health Savings Account at thesame time.

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Other Benefits Available to IBMers

Employee Assistance ProgramAll benefits-eligible participants and their eligible family members have access to the EmployeeAssistance Program, which offers up to eight counseling sessions per situation per year at nocost to you. This benefit is available even if you are enrolled in an HMO or elect No Coverage

through IBM.

To access the Employee Assistance Program, call OptumHealth Behavioral Solutions ClinicalReferral Line at 800-445-9720 (TRS: 800-525-5668). This toll-free number, available 24 hours aday, 7 days a week, is staffed by licensed mental health professionals with clinical experience intreating a range of mental health and substance abuse care needs.

IBM Group Life InsuranceIBM provides this coverage as of your date of hire; benefits are paid in the event of your death.IBM Group Life Insurance (GLI) coverage is fully paid by IBM and coverage above $50,000 issubject to imputed income. To avoid imputed income, you may submit a GLI waiver form within30 days of your date of hire, or within 30 days of certain qualified changes.

IBM Travel Accident InsuranceThis coverage provides benefits in the event of your injury or death as a result of an accidentwhile traveling on official company business. IBM Travel Accident Insurance is also fully paid byIBM and effective as of your date of hire.

Group Universal Life InsuranceIn addition to the Group Life and Travel Accident coverage that IBM provides, you can purchaseadditional life insurance through The Prudential Insurance Company of America. Group UniversalLife Insurance is not an IBM benefit; contact Prudential directly at 877-448-5778 if you wish toenroll.

Long-term Care PlanThis coverage can help protect you and your family from the costs of long-term custodial care those for nursing home or home health care in the event of serious illness or injury. The Long-term Care Plan is not an IBM benefit; contact J ohn Hancock Life Insurance Company directly at800-255-8991 or log on to http://ibm.jhancock.com if you wish to purchase coverage for yourselfor eligible family members. To access J ohn Hancocks Web site, use the following information:

User ID: IBM; Password: jhancock.

IBM Special Care for Children Assistance Plan (SCCAP)This plan provides reimbursement for certain expenses that are outside the scope of the cover-age available under the IBM medical and dental plans for eligible children with, physical ordevelopmental disabilities. Assistance under IBM SCCAP is available only after all other aidavailable from federal, state and other sources has been exhausted. Each case is individuallyreviewed to determine eligibility for IBM SCCAP assistance. IBM SCCAP benefits, up to a lifetime

maximum of $50,000 per child, are available until the child reaches age 26 or is no longer eligibleunder the IBM medical and dental plans, whichever occurs first. For more information about IBMSCCAP, contact the IBM Employee Services Center at 800-796-9876.

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MoneySmartA MoneySmart Coach can help you assess the impact of your IBM benefit decisions on yourfinancial plan. Contact a MoneySmart coach for help understanding things such as the impact ofpurchasing disability coverage versus not having this coverage in the event you become disabled,determining if a high deductible health plan with a health savings account (HSA) is the rightchoice for you, how much should you put in your Health Care or Dependent Care Spending

Account and many other financial planning needs. For assistance with financial planning, call:877-543-7678 (TTY: 866-217-8694) or send an email to moneysmart@ayco.com.

IBM Care Advantage ProgramThis program gives you and any of your covered family members who are not eligible forMedicare easy access to knowledgeable resources and support when you need medical care.

The program offers you assistance in three ways: hospital precertification, care management andcondition management.

If you require treatment for a significant medical condition, serious illness or injury, a CareCoordinator (a registered nurse from your health plan assigned to you and your family) can helpyou: Learn about your illness, medical condition, or injury and treatment options.

Prepare for a healthy pregnancy. Prepare for doctor visits to facilitate more productive discussions about your care. Plan for your care after a hospital stay. Precertify certain medical services, including hospitalization, and assess your need for home

health care or other assistance, if necessary.

Depending on your medical needs, a health care professional from your health plan may contactyou directly. You may also call your health plan with a specific question about your treatment, orto request ongoing support. IBMs health plans each offer nurse helplines for additional support;call your plan for details.

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Administrative and Legal Information

Coverage for DependentsAs an IBMer eligible for health benefits, you may choose coverage for your eligible familymembers, including your spouse (opposite gender or same gender) or domestic partner anddependent children. Please review the information in this section carefully before deciding whichof your dependents to enroll. For additional information about dependent eligibility, please refer to

About Your Benefits: Health Care, available in the Reference Library on NetBenefits.

The following individuals are considered eligible dependents under the IBM medical, dental andvision plans:

Your spouse An eligible domestic partner Your eligible children up to age 26, regardless of their financial dependency on you or

another person or their student, employment or marital status, including your natural and legally adopted children to age 26 your stepchildren to age 26 other children for whom IBM determines that you have been granted permanent

legal guardianship by a court of law. You will be considered to have permanent

legal guardianship only if both of the following requirements are met: The child is subject to a court order under which you, the employee,

have been granted permanent legal guardianship of the childs personand property.

A parent/child relationship exists between you, the employee, and thechild.

If you have a child with a disability, your child may be eligible for coverage beyond age 26 if IBMdetermines, on the basis of the childs condition, that your child is mentally or physically disabled,that the disability existed prior to the childs 26

thbirthday, that the child is incapable of self-support

due to the mental or physical disability, and that the child is not married.

Federal Tax Implications for Children

Federal tax laws may have financial implications for IBMers who enroll dependent children.Dependent children must meet certain tax requirements to receive IBM health coverage on a tax-free basis. Dependent children who do not meet these requirements may still be enrolled in IBMhealth coverage; however, the value of their coverage will be considered imputed income to youand will be taxed accordingly. Dependent children who meet IBMs requirements for coverage butdo not meet the federal tax law requirements for tax-free health coverage include children of asame-gender spouse or an eligible domestic partner whom you have not legally adopted, andwho are not qualifying relatives as defined below.

If your child or the child of your same-gender spouse or domestic partner meets IBMs eligibilitycriteria for coverage and is not eligible for tax-free coverage, the child will be subject toimputed income on the value of their coverage.

If your same-gender spouse or domestic partner or his/her children meet the IRS qualifyingrelative criteria which allow you to claim him/her as a dependent on your federal income taxreturn, IBM will not impute taxable income on their benefits. However, if you have not adopted thechildren, they will be treated as dependents of your same-gender spouse or domestic partner andnot of you, and you must notify IBM to impute taxable income on the value of their coverage,unless all of the following criteria are met:

1. More than half of the childs support for the year comes from you.2. The child resides in and is a member of your household for the entire tax year.

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3. The individual for whom the child is a qualifying child (generally your domestic partner)has no individual tax return filing requirement or files only to claim a refund of withheldtaxes.

If you have questions about these tax rules, you should contact your personal tax advisor.

Medicaid /Child Health Insurance Plan (CHIP)Eligible employees and their eligible dependents are allowed to enroll in the IBM health benefitsprogram during the year if: Their coverage is lost under their respective state Medicaid or CHIP program; or They become eligible for premium assistance under their respective state Medicaid or CHIP

program.

If you are not already enrolled in the IBM health benefits program when one of the events aboveoccurs, you will be able to enroll yourself and your eligible dependent(s) within 60 days of thedate of the event. Coverage will be retroactive to the date of the loss of Medicaid or CHIPcoverage or the date you became eligible for premium assistance under Medicaid or CHIP, asapplicable.

Enrollment requests received later than 60 days after one of the events above will not beaccepted. However, you will have an opportunity to enroll during the next annual enrollmentperiod.

For Those Covering Same Gender Spouses and Domestic PartnersSpecial tax rules also apply for same gender spouses and domestic partner coverage; therefore,you should consider the financial impact if youre enrolling a domestic partner in IBM medical,dental or vision coverage. For more information, refer to theDomestic Partner Information Guideavailable in the Reference Library on NetBenefits or the Career and life section of w3, or call theIBM Employee Services Center.

Eligibility VerificationEligibility for health care benefits is determined in accordance with the eligibility requirements

described above and in the Summary Plan Descriptions:About Your Benefits: Health Care (foractive employees) andAbout Your Benefits: Post-Employment (for retirees). IBM may requiredocumentation to support the eligibility of any dependent enrolled in an IBM benefit plan. If theplan administrator learns that you have enrolled an individual who is not an eligible dependent,that individual will be removed from coverage and you may be required to repay any benefits paidon behalf of such individual. In addition, you may be subject to disciplinary action, up to andincluding dismissal, and/or loss of eligibility under the plans. If you enroll an eligible dependent fortax-free coverage who is not eligible for tax-free coverage, appropriate corrective actions will betaken.

Note: In certain states, some fully-insured plans (e.g., HMOs) may offer coverage directly todependents who are not eligible for coverage under an IBM plan. Contact the plan directly if youhave questions.

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About Medicare Coverage

Medical ServicesAs an active employee, the IBM medical plan option provides primary coverage for you and anyof your covered dependents, (even if anyone is eligible for Medicare) and Medicare may providesecondary medical coverage for those who are eligible for Medicare.

Keep the following in mind when your employment with IBM ends: Medicare will provide primary coverage for anyone who is Medicare-eligible and the IBM

medical plan will provide secondary coverage. You and/or any Medicare-eligible dependent(s) must enroll in Medicare Part B immediately

when your active employment ends. Failure to do so will result in penalties added to yourfuture Medicare Part B premiums. (You do not need to enroll in Medicare Part A; coverage isautomatic.)

If you or your eligible dependent(s) become eligible for COBRA coverage at any time during theyear and are also eligible for Medicare due to age 65 or disability, you or your dependent mustenroll in Medicare Parts A & B, so that it is effective the first day of COBRA coverage. Medicarewill then provide primary coverage and COBRA coverage will be secondary.

For more information, refer toAbout Your Benefits: Health Care, the Summary Plan Description,available in the Reference Library.

Prescription DrugsCoverage for prescription drugs under most IBM medical options meets Medicares creditablecoverage standard, which means IBMs coverage, on average for all plan participants, isexpected to pay out as much as the standard Medicare Part D prescription drug coverage.

Medicare-eligible individuals may be enrolled in IBM medical coverage that provides coverage forprescription drugs or a Medicare Part D prescription plan, but not both. You can view IBMsNotice of Creditable and Non-Creditable Coverage in the Reference Library.

Transition of Care

If your health plan administrator is changing or you are selecting a new medical option and you orone of your covered dependents is currently undergoing treatment for certain serious medicalconditions or prenatal/maternity care, you may be eligible to continue receiving in-networkbenefits for a limited period of time, even if your doctor does not belong to your new plan network.Contact the administrator of your new plan for more information.

Credit for No Coverage Option if You Decline Medical and/or DentalCoverageSince medical and dental coverage is optional, you can decline coverage from IBM for thesebenefits. If you elect No Coverage as your option for one or both of these benefits, you willreceive the following credit(s) each month in your paycheck, which will be treated as taxableincome: Medical No Coverage Credit: $30 per month Dental No Coverage Credit: $5 per month

If you decline IBM coverage, you can enroll again during the next enrollment period, typically heldeach fall, or if you experience a qualified status change (such as a loss of other coverage) thatwould allow you to enroll during the year.

Please note that the credit for No Coverage option is only available to you while you are activelyemployed by IBM.

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Evidence of Insurability (EOI)Evidence of insurability (EOI), also called proof of good health, is proof acceptable to theinsurance company that a participant is in good health. Generally, the participant must complete amedical questionnaire, which is then reviewed and approved by the insurance company beforecoverage becomes effective.

ID CardsIf you have questions about ID cards, please contact the administrator for your medical, dental orvision option. Medical: If you enroll or change your medical option, you will receive new medical ID card(s)

within two to three weeks of the date you complete your enrollment. Prescript ion Drug: If your prescription drug benefits will be provided under the IBM

Managed Pharmacy Program or a non-HMO medical option, you will receive a separateprescription drug ID card(s).

Dental: If you enroll or change your dental option, you will receive new dental ID card(s)within two to three weeks of the date you complete your enrollment.

Vision: If you enroll in the IBM Vision Plan or VSP Vision Card, you will receive a vision IDcard two or three weeks after you enroll.

Health Care Spending Account : If you will be participating in the Health Care Spending

Account you will receive a Health Debit Card within two to three weeks after you enroll, alongwith instructions for its activation and use.

Long-Term Disability and 401(k) Disability Protection: MetLife issues ID cards to thosewho are enrolled in IBM Long-Term Disability and/or 401(K) Disability coverage. The ID cardprovides a unique identifying number that can be used as an alternative to your SocialSecurity number in the event you need to contact MetLife regarding a Long-Term Disabilityclaim. If you have questions, contact MetLife directly at 800-638-0064.

Qualified Status ChangesA qualified status change is a specific change to your family, employment or coverage status thatenables you to make certain benefit changes during the calendar year. These types of changesare defined by IRS Code Section 125 and include events like marriage, birth of a child, death,divorce, and other changes which affect benefits eligibility for you and/or your dependents. You

must call the IBM Employee Services Center or log on to NetBenefits to make eligible changes toyour coverage within 30 days of the date of the qualified status change; otherwise, you will not beable to make changes until the next annual enrollment period.

Note: You may be required to submit proof of your qualified status change to complete theenrollment.

Who to ContactContact information for the carriers of your benefit plans is available via theWho to Contact linkon NetBenefits, located on the bottom of the page on theHealth & Insurance tab.

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This enrollment guide is intended to provide an overview of certain plans and programs in which you mayparticipate. It is not an official Summary Plan Description and does not provide full details. Complete detailsare found in the formal plan documents, which are the complete and exclusive statement of the companysobligations under the plan. The official plan documents shall govern in the event of a conflict betweeninformation contained in these or other documents and statements. The plan administrator retains exclusive

authority and discretion to interpret the terms of the benefits plans and programs described herein.

The company reserves the right, in its sole discretion, to amend, change, suspend or terminate any benefitor other plan, program practice or policy of the company at any time. The company does not have anyobligation to, and nothing contained in this enrollment guide shall be construed as creating an express orimplied obligation or promise on the part of the company to, maintain, continue to offer, or make availablesuch plans, programs, practices or policies.

Eligibility to participate in a plan or program or receipt of benefits does not constitute a promise or right ofcontinued employment or render any person an employee of IBM.

IBM and its affiliated companies do not endorse any HMO or other provider, or represent or warrant thequality of care they provide. The decision to choose any health plan option or use any provider is theparticipants responsibility.

Not all of the plans and programs within this enrollment guide pertain to all of IBMs affiliated companies.

For more information, contact the IBM Employee Services Center at 800-796-9876 (TRS for deaf and hardof hearing: 800-426-6537).

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