There is growing concern nationally about the future ability of Medicare to provide the same level of benefits as it does today. Currently, Medicare covers just over 50% of health care costs for those over 65, and medical expenses continue to rise. Clearly we will all need to save more and review carefully our health insurance coverage and ability to pay out-of-pocket medical expenses in retirement.

At Kenyon College we have been evaluating options to help faculty and staff become better prepared to meet retiree medical costs, and have access to quality, comprehensive insurance to supplement Medicare. We are pleased to announce that to address this need we will be adopting a new retiree medical benefit beginning July 1, 2007. The Kenyon College Plan is offered under the Emeriti Program, an innovative program designed to assist colleges, universities and other higher education-related, tax-exempt organizations in meeting the health security needs of retirees and their families. Emeriti Retirement Health Solutions is a nonprofit consortial endeavor developed by higher education leaders through the generous support of The Andrew W. Mellon Foundation.

Under this new Plan, Kenyon will begin making contributions for all eligible employees beginning at age 35 to help pre-fund the health benefits that may become available to you and your family under the terms of the Plan after you retire. You will also have an opportunity to make voluntary contributions. You will determine how the funds will be invested, choosing from several mutual fund investment options from Fidelity Investments.

This is called a "defined contribution" funding approach, which means that the amount of funds available to you under the Plan in retirement is determined by the contributions made to your Emeriti Health Accounts and the investment performance of those contributions. This makes the retiree medical plan similar to our 403(b) retirement plan in terms of how it is funded. In both types of plans, Kenyon College makes before-tax contributions on your behalf during your working years, and any earnings accumulate tax free. However, the two plans are quite different in terms of how benefits are paid out. Under a 403(b) retirement plan, distributions can be used for any purpose, but they are generally fully taxable as ordinary income. In contrast, the balances in your Emeriti Health Accounts are available only for payment of health insurance premiums and reimbursement of other qualified medical expenses in retirement-but the contributions plus all earnings are paid out tax free, which can mean significant savings over paying medical expenses and health insurance premiums with 403(b) distributions. Any contributions that you elect to make are contributed on an after-tax basis; at retirement the full value of the assets are paid out tax-free to cover your medical expenses and insurance premiums.

The key components of the new Program are:

o A tax-advantaged way to invest and accumulate assets to meet future retiree medical expenses - the Emeriti Health Accounts - with mutual fund choices and administrative services provided by Fidelity Investments^®.

o A specially-designed health insurance program building upon the foundation of Medicare - the Emeriti Health Insurance Options - underwritten by Aetna Life Insurance Company.

oAn innovative tax-free way to pay for other qualified out-of-pocket medical expenses - the Emeriti Reimbursement Benefit - administered by Acclaris, a third party administrator.

As one of the first institutions of higher education to offer a plan established under the Emeriti Program, Kenyon College is proud to be part of this new Program. In order to help you take full advantage of this important new benefit, we are offering opportunities to learn more about it.

In the next several weeks you will receive:

• ·An invitation to attend an Informational Meeting about the Emeriti Program. Representatives from Emeriti, Fidelity Investments and Aetna will be on hand to review investment options, health insurance coverage information, and specific details of Kenyon's Plan.
• An information packet about the Plan and the Emeriti Program, with important details about steps you will need to take to complete your enrollment. Please take time to review this material when it arrives.

We urge you to attend one of the Informational Meetings, to watch for the packet in the mail, and to take advantage of the informational resources available through the Emeriti call center at 1-866-EMERITI (1-866-364-7484) and website (www. emeritihealth.org). In the interim, if you have any additional questions, please don't hesitate to contact the Office of Human Resources.