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April 26, 2013

FIRST NAME M.I. LAST NAME ADDRESS LINE 1 ADDRESS LINE 2 CITY STATE ZIP CODE RE: Your CalPERS Long-Term Care Program Coverage ID #NUMBER

Dear First Name M.I. Last Name: Thank you for being among the nearly 150,000 members of the CalPERS Long-Term Care (LTC) Program. We know that you are counting on this Program for support in the future, and we are committed to ensuring that it remains secure and financially solvent. To achieve this goal, the Board of Administration (Board) voted in December 2009 to raise premium rates. This included an increase in 2010 and annual 5 percent increases starting in 2011. In October 2012, the Board determined that all members with Lifetime Coverage and Built-in Inflation Protection issued from 1995 through 2004 would continue to receive an additional premium increase. With your current coverage, you will receive the 5 percent annual increases in 2013 and 2014. In 2015, you will see an additional premium increase of approximately 85 percent, spread over two years. This letter, in accordance with your Evidence of Coverage, is your formal notification of the 5 percent premium increase for 2013. In March, you received a letter describing choices you would have available. You now need to make choices regarding your coverage. You may choose to keep your current coverage and accept these increases. You may also select among several options to adjust your coverage and avoid these increases. We encourage you to select the option that best meets your long-term care needs. Please find the detailed options in the enclosed Summary of Your Current Benefits and Available Options. Here are the steps to consider, as you review your options: 1. Review your Evidence of Coverage and Schedule of Benefits. To obtain a copy of either of these documents, please call our customer service representatives at the toll-free number listed below.

2. Evaluate your benefit needs. When making your decision, you may want to consult with a qualified financial planner, family member, or other trusted advisor. You may also call our customer service representatives at the toll-free number listed below to discuss the available options or the cost of care in your area. 3. Review the Summary of Your Current Benefits and Available Options, enclosed. 4. Select the option that best meets your needs and follow the instructions on the corresponding Option Election Form. 5. If you wish to accept Option 1 and keep your current coverage, no further action is necessary on your part. By selecting Option 1, you are accepting the 2013 premium increase of 5 percent with no change to any of your benefits. Your policy will also be subject to the 2014 premium increase of 5 percent, as well as the 2015 premium increase of approximately 85 percent spread over two years. Prior to the 2014 premium increase, you will be provided another opportunity to change your coverage and avoid the 2014 and 2015 premium increases. You have until <<Month Day, Year>> to let us know which option you would like to select. The option you select will become effective Month Day, Year. If you would like to change your policy, please sign and date one of the enclosed Option Election Forms and return the form in the postage paid envelope provided by <<Month Day, Year>>. In the event we do not receive a signed election form, you will automatically receive the 2013 premium increase of 5 percent, with no change to your benefits. Upon receipt of your Option Election Form, your new schedule of benefits will be sent to you. If you pay premiums through payroll deduction, pension deduction, or electronic funds transfer, your premiums will automatically adjust to reflect the new amount as of Month Day, Year. If you pay premiums through direct billing, your new premium amount will be reflected on your invoice for premiums due Month Day, Year. We know this is an important decision. If you have any questions, please call our customer service representatives at 1-888-877-4934 (Monday through Friday, 8 am to 5 pm PST) or email us at calpersltc@ltcg.com. You may also write us at P.O. Box 64902, St. Paul MN 55164-0902. Sincerely,

CalPERS Long-Term Care Program Enclosure(s)

Summary of Your Current Benefits and Available Options


Total Coverage Amount / Benefit Period Your Current Benefits Lifetime Current Daily Benefit Amount $250 Future Premium Increase(s)

Inflation Protection

<<Frequency>> Premium

Built-in

$1,000.00 2014 (5%) and 2015 (85%) 2014 (5%) and 2015 (85%)

Available Options Option 1: Accept the 2013 (5%) premium increase with no Lifetime $250 Keep $1,050.00 change to any of your benefits. Option 2: Avoid the 2013 (5%) premium increase by decreasing your current Daily Lifetime $238 Keep $1,000.00 Benefit Amount by 5% and keeping your current premium the same. Option 3: Avoid the 2013 (5%) premium increase by reducing your Lifetime Coverage to a 6$547,500* $250 Keep $750.00 Year Benefit Period and (6-Year) keeping Built-in Inflation Protection. Option 4: Avoid the 2013 (5%) premium increase by reducing your Lifetime Coverage to a 3$273,750* $250 Keep $500.00 Year Benefit Period and (3-Year) keeping Built-in Inflation Protection. Option 5: Avoid the 2013 (5%) Drop** premium increase by reducing (But retain your Lifetime Coverage to a current new 10-Year Benefit Period $912,500* $900.00 $250 Daily and dropping your Built-in (10-Year) Benefit Inflation Protection, while Amount) retaining your current Daily Benefit Amount. Option 6: Avoid the 2013 (5%) Drop** premium increase by reducing (But retain your Lifetime Coverage to a current $547,500* $800.00 new 6-Year Benefit Period and $250 Daily (6-Year) dropping your Built-in Inflation Benefit Protection, while retaining your Amount) current Daily Benefit Amount. Option 7: Avoid the 2013 (5%) Drop** premium increase by reducing (But retain your Lifetime Coverage to a current $273,750* $700.00 new 3-Year Benefit Period and $250 Daily (3-Year) dropping your Built-in Inflation Benefit Protection, while retaining your Amount) current Daily Benefit Amount. *See important information about reducing your Comprehensive Lifetime Policy Coverage. **See important information about dropping Built-in Inflation Protection.

2015 (85%)

2015 (85%)

No premium increase for 2014 or 2015

No premium increase for 2014 or 2015

No premium increase for 2014 or 2015

*Reducing Your Comprehensive Lifetime Policy Coverage Reducing your Lifetime Coverage amount to a 10-Year, 6-Year, or 3-Year Benefit Period will provide you with a total coverage amount equal to ten years, six years, or three years x 365 days x your current Daily Benefit Amount. For example, a $257 Daily Benefit Amount will provide coverage up to $938,050 when you reduce to a Ten-Year Benefit Period (365 days x $257 x 10 years = $938,050). The 6-Year Benefit Period will provide up to $562,830 in total coverage, and the 3-Year Benefit Period will provide up to $281,415. ** Dropping Built-in Inflation Protection and Retaining Current Daily Benefit Amount Options 5, 6 and 7 incorporate the concept of retained inflationthe ability to keep your Daily Benefit Amount that you have already accrued and paid for over the years. Previously, when a policyholder dropped their inflation protection outside of the premium increase period, their Daily Benefit Amount reverted to the minimum Daily Benefit Amount for their plan. You can avoid the premium increases by dropping Built-In Inflation Protection and still retain your current Daily and Monthly Benefit Amounts. For example, if you originally purchased a $130 Daily Benefit and over time it has increased to $257, you will be able to maintain the $257 Daily Benefit and reduce your premium by dropping inflation protection. While you will no longer receive automatic coverage increases each year, we will offer the opportunity to increase your coverage every three years. These periodic increase offers will allow you to keep pace with the rising costs of long-term care. This offer is made under the Benefit Increase Option (BIO). If you accept the offers, you will pay an increased premium only for the additional coverage you purchase. The cost of these increases is determined by the amount of the additional coverage offered, the current premium rates, and your age at the time of the offer. These offers will stop once you have declined two prior offers. The next Benefit Increase Offer will take place in December 2013. No offers are made to you while you are receiving benefits.

CalPERS LONG-TERM CARE PROGRAM OPTION 2 ELECTION FORM To select Option 2 (decrease your current Daily Benefit Amount and all related coverage amounts by 5 percent and keep your current premium the same), you must sign and date this form in the box below and return it in the enclosed postage-paid envelope within 30 days from the date of this letter. If you select Option 2, you will be subject to the 5 percent premium increase in 2014, as well as the 2015 premium increase of approximately 85 percent spread over two years. You will be provided another opportunity in 2014 to change your coverage and avoid the 2014 and 2015 premium increases.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 Lifetime YES NO FIELD_23

New FIELD_35 FIELD_36 FIELD_37 Lifetime YES NO FIELD_34

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 2, which changes my coverage as shown above. I understand my decreased benefit amounts will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_01

CalPERS LONG-TERM CARE PROGRAM OPTION 3 ELECTION FORM To select Option 3 (reduce your Lifetime Coverage to a 6-Year Benefit Period and keep Built-in Inflation Protection), you must sign and date this form in the box below and return it in the enclosed postage-paid envelope within 30 days from the date of this letter. If you select Option 3, you will be subject to the 2015 premium increase of approximately 85 percent spread over two years. You will be provided another opportunity in 2015 to change your coverage and avoid the 2015 premium increase.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 FIELD_21 YES NO FIELD_23

New FIELD_35 FIELD_36 FIELD_37 FIELD_38 YES NO FIELD_39

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 3, which changes my coverage as shown above. I understand my plan change will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_02

CalPERS LONG-TERM CARE PROGRAM OPTION 4 ELECTION FORM To select Option 4 (reduce your Lifetime Coverage to a 3-Year Benefit Period and keep Built-in Inflation Protection), you must sign and date this form in the box below and return it in the enclosed postage-paid envelope within 30 days from the date of this letter. If you select Option 4, you will be subject to the 2015 premium increase of approximately 85 percent spread over two years. You will be provided another opportunity in 2015 to change your coverage and avoid the 2015 premium increase.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 FIELD_21 YES NO FIELD_23

New FIELD_30 FIELD_31 FIELD_32 FIELD_33 YES NO FIELD_34

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 4, which changes my coverage as shown above. I understand my plan change will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_03

CalPERS LONG-TERM CARE PROGRAM OPTION 5 ELECTION FORM To select Option 5 (reduce your Lifetime Coverage to a new 10-Year Benefit Period and drop your Built-in Inflation Protection, while retaining your current Daily Benefit Amount), you must sign and date this form in the box below and return it in the enclosed postagepaid envelope within 30 days from the date of this letter. If you select Option 5, you will not be subject to the 5 percent premium increase in 2013 and 2014, nor the 2015 premium increase of approximately 85 percent.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 FIELD_21 YES NO FIELD_23

New FIELD_35 FIELD_36 FIELD_37 FIELD_38 NO YES FIELD_39

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 5, which changes my coverage as shown above. I understand my plan change will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_02

CalPERS LONG-TERM CARE PROGRAM OPTION 6 ELECTION FORM To select Option 6 (reduce your Lifetime Coverage to a new 6-Year Benefit Period and drop your Built-in Inflation Protection, while retaining your current Daily Benefit Amount), you must sign and date this form in the box below and return it in the enclosed postagepaid envelope within 30 days from the date of this letter. If you select Option 6, you will not be subject to the 5 percent premium increase in 2013 and 2014, nor the 2015 premium increase of approximately 85 percent.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount* Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 FIELD_21 YES NO FIELD_23

New FIELD_35 FIELD_36 FIELD_37 FIELD_38 NO YES FIELD_39

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 6, which changes my coverage as shown above. I understand my plan change will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_02

CalPERS LONG-TERM CARE PROGRAM OPTION 7 ELECTION FORM To select Option 7 (reduce your Lifetime Coverage to a new 3-Year Benefit Period and drop your Built-in Inflation Protection, while retaining your current Daily Benefit Amount), you must sign and date this form in the box below and return it in the enclosed postagepaid envelope within 30 days from the date of this letter. If you select Option 7, you will not be subject to the 5 percent premium increase in 2013 and 2014, nor the 2015 premium increase of approximately 85 percent.

Benefit Amounts/Premium Nursing Home Daily Maximum Assisted Living Facility Daily Maximum Home & Community Care Monthly Maximum Total Coverage Amount Built-in Inflation Protection Benefit Increase Option FIELD_22 Premium

Current FIELD_17 FIELD_18 FIELD_19 FIELD_21 YES NO FIELD_23

New FIELD_35 FIELD_36 FIELD_37 FIELD_38 NO YES FIELD_39

Enrollee: FIELD_2 FIELD_3 FIELD_4 Coverage ID Number FIELD_13 My signature below affirms my selection of Option 7, which changes my coverage as shown above. I understand my plan change will be effective FIELD_16. _______________________________________ Your Signature ______________ Date

PLEASE RETURN THIS FORM WITHIN 30 DAYS FROM THE DATE OF THIS LETTER. r_policy_barcode SUB000000019 RESOL00001 r_policy_resol_barcode_id r_policy_batch_barcode_id r_offer_barcode_id_02