Supplemental Incentive Savings Plan - Aetna Services Inc.
The Supplemental Incentive Savings Plan
for Certain Employees of
Aetna Services, Inc.
TABLE OF CONTENTS
I. DEFINITIONS AND CONSTRUCTION....................... 3
II. DEFERRAL OF PAY AND EMPLOYER CONTRIBUTIONS......... 7
III. PAYMENT OF DEFERRED AMOUNTS........................ 10
IV. MANAGEMENT OF THE PLAN............................. 13
V. AMENDMENT AND TERMINATION.......................... 15
VI. ADOPTION BY AFFILIATE.............................. 16
VII. MISCELLANEOUS...................................... 17
A. LIST OF PHYSICIAN GROUPS
B. LIST OF PARTICIPATING COMPANIES
Aetna Inc. (the 'Company') hereby amends and restates,
as its plan and its obligation, The Supplemental Incentive
Savings Plan for Certain Employees of Aetna Services, Inc.,
formerly Aetna Life and Casualty Company, (the 'Employer')
established by the Employer effective August 30, 1984. This
Plan is intended to provide benefits which supplement the
benefits provided under The Aetna Life and Casualty Company
Incentive Savings Plan (the 'ISP'): (1) benefits in excess of
those permitted to be provided after application of one or
more limits applicable to the ISP under the Internal Revenue
Code of 1986 (the 'Code'); (2) benefits for the period prior
to eligibility for participation under the ISP; and
(3) benefits provided at the direction of the Board of
Directors of the Company or the Board of Directors of
Employer but which are not provided under the ISP.
This document constitutes two separate plans, one of
which (the 'Mirror Plan') provides certain benefits, as more
specifically set forth in Section 2.1(a) hereof, that are
attributable solely to the benefits, during the period of
eligibility to participate under the ISP, that would be
provided under the ISP but for the application of sections
401(a)(17) or 402(g) of the Code, and one of which (the
'Supplemental Plan') provides benefits, as more specifically
set forth in Sections 2.1(b) and (c) hereof, for the period
prior to eligibility for participation under the ISP and such
additional benefits as are provided at the direction of the
Board of Directors of the Company or the Employer but which
- 2 -
are not provided under the ISP. The Mirror Plan and
Supplemental Plan shall constitute separate plans for
(without limitation) the purposes of Public Law 104-95
governing state taxation of deferred compensation. The two
plans shall be referred to herein in the aggregate as the
This instrument sets forth provisions which constitute
the Plan as amended and restated effective July 1, 1996.
DEFINITIONS AND CONSTRUCTION
1.1 'Account' means, for any Participant, the account
established for the Participant under Section 2.3. Each
Account will consist of two sub-accounts, the Mirror Sub-
Account and the Supplemental Sub-Account.
1.2 'Account Balance' means, for any Participant as of
any date, the aggregate amount reflected in the Participant's
Mirror Sub-Account and the Participant's Supplemental Sub-
1.3 'Affiliate' means any entity which, with the
Company, constitutes a group of trades or businesses under
common control, a controlled group of corporations, an
affiliated service group, or a group of corporations
otherwise required to be aggregated, as provided in sections
414(b), (c), (m), and (o) of the Code, respectively.
1.4 'Beneficiary' means the person or persons
designated from time to time in writing by a Participant to
receive payment under the Plan after the death of such
- 3 -
Participant or, in the absence of such designation or in the
event that such designated person or persons predeceases the
Participant, the Participant's estate.
1.5 'Board' means the Board of Directors of the
1.6 'Code' means the Internal Revenue Code of 1986, as
1.7 'Company' means Aetna Inc. or any successor by
merger, consolidation, purchase or otherwise.
1.8 'Effective Date' means the effective date of this
amended and restated Plan, July 1, 1996.
1.9 'Eligible Employee' means, for any Plan Year, an
Employee who satisfies either of the following:
(a) an employee whose benefit under the ISP for the Plan
Year is limited by the application of section 401(a)(17) or
402(g) of the Code as set forth in Section 2.1(a) hereof; or
(b) an employee whose terms of employment, as set forth
in a written agreement between the Employee and the Employer
or a Participating Company, allow the Employee to defer Pay
under this Plan prior to the time the Employee would be
eligible to participate under the ISP or provide explicitly
for a specified benefit to be provided under this Plan.
Notwithstanding the foregoing, no employee of a Physician
Group shall be an Eligible Employee.
1.10 'Employee' means any person who is actively
employed by the Employer or a Participating Company, other
than as a general agent, a broker, an independent contractor,
- 4 -
or a leased employee (within the meaning of Section 414(n)(2)
of the Code).
1.11 'Employer' means Aetna Services, Inc., formerly
Aetna Life and Casualty Company.
1.12 'ISP' means the Aetna Life and Casualty Company
Incentive Savings Plan.
1.13 'Mirror Sub-Account' means that portion of a
Participant's Account that is credited with benefits provided
by Section 2.1(a) hereof.
1.14 'Participant' means an Eligible Employee or former
Eligible Employee who has an Account Balance.
1.15 'Participating Company' means any Affiliate which
either (a) is listed in Appendix B on the Effective Date, or
(b) after the Effective Date, adopts the Plan in accordance
with the provisions of Article VI hereof. If the Plan is
only adopted by a Participating Company with regard to
certain divisions, only those divisions shall be deemed the
Participating Company and the other divisions of such
Participating Company shall not be deemed to be Participating
Companies hereunder. Notwithstanding the foregoing, no
Physician Group shall be eligible to become a Participating
Company. On the date that a Participating Company ceases to
be an Affiliate, it shall also cease to be a Participating
1.16 'Pay' means, for any Eligible Employee for any Plan
Year, the amount determined using the definition of 'Pay' set
forth in the ISP.
- 5 -
1.17 'Physician Group' means any Affiliate, other than
Aetna Physician Management Corporation ('APMC'), which
employs primarily licensed physicians, physician assistants
or nurse practitioners, including but not limited to those
entities set forth in Appendix A.
1.18 'Plan' means the Aetna Inc. Supplemental Incentive
Savings Plan, as set forth herein and as amended from time to
1.19 'Plan Year' means the calendar year.
1.20 'Supplemental Sub-Account' means that portion of a
Participant's Account that is credited with benefits provided
by Sections 2.1(b) and (c) hereof.
1.21 'Valuation Date' means the last business day of
each calendar month.
1.22 Construction. The masculine gender, where
appearing in the Plan, shall be deemed to include the
feminine gender, unless the context clearly indicates to the
contrary. Where appropriate, words used in the singular
include the plural and words used in the plural include the
singular. The words 'hereof,' 'herein,' 'hereunder' and
other similar compounds of the word 'here' shall mean and
refer to this entire Plan, not to any particular provision or
section. Capitalized terms used herein and not defined above
shall have the meanings set forth in the ISP.
- 6 -
DEFERRAL OF PAY
2.1 Deferral of Pay and Incentive Contributions.
(a) During any Plan Year, each individual who is an
Eligible Employee for the Plan Year shall have credited to
the Mirror Sub-Account of the Eligible Employee's Account the
difference between (1) the amount that would have been
credited to the Eligible Employee's Deferral Account and
Incentive Contribution Account pursuant to the Eligible
Employee's Compensation Deferral Agreement but for (i) the
application of Section 401(a)(17) of the Code, or (ii) the
imposition of the cap provided under Section 402(g) of the
Code for the Plan Year on contributions to the Eligible
Employee's Deferral Account, and (2) the amount that actually
was credited to the Eligible Employee's Deferral Account and
Incentive Contribution Account during the Plan Year.
(b) Each individual who is an Eligible Employee for a
Plan Year and who is not yet eligible to participate under
the ISP for the Plan Year shall be entitled to make an
election regarding deferral of pay on a form and in the
manner prescribed by the Company for this purpose. The
election shall be made after the date on which the individual
becomes an Eligible Employee. The election shall designate
the amount by which the Eligible Employee's Pay for the
portion of the Plan Year that the Eligible Employee is not
eligible to participate under the ISP shall be prospectively
reduced for contribution to the Plan. Such amount shall be
credited to the Supplemental Sub-Account of the Eligible
- 7 -
Employee's Account in accordance with the procedures
established by the Company. In addition, the corresponding
amount that would have been credited to the Eligible
Employee's Incentive Contribution Account if the Eligible
Employee's deferral of pay had been made pursuant to the ISP
shall be credited to the Eligible Employee's Supplemental
Sub-Account under this Plan.
(c) In addition to the amounts determined in accordance
with Subsections 2.1(a) and (b) to be contributed to a
Participant's Mirror Sub-Account and Supplemental Sub-
Account, respectively, there shall be credited to a
Participant's Supplemental Sub-Account for any Plan Year such
other amount as may be determined by the Board to be
contributed to the Participant's Supplemental Sub-Account for
such Plan Year. Any corresponding reductions to or
deductions from the compensation otherwise payable to the
Participant shall be made as specified by the Board and as
agreed to by the Participant.
2.2 Payment of FICA and Other Taxes. The compensation
currently payable to an Eligible Employee during any period
shall be reduced by an amount equal to the FICA and other
taxes required to be withheld by the Employer or the
applicable Participating Company during that period with
respect to the amount deferred pursuant to Section 2.1.
2.3 Account; Credits and Debits; Earnings. The Company
shall establish on its books an Account for each Participant.
Each Account shall consist of a Mirror Sub-Account and a
- 8 -
Supplemental Sub-Account. Amounts deferred on behalf of a
Participant, or allocated to a Participant, pursuant to
Section 2.1 shall be credited to the Participant's
appropriate sub-account on the date on which such amounts
would have been credited to the Participant's Deferral
Account and Incentive Contribution Account under the ISP had
such amounts been payable under the ISP. In addition, as of
each Valuation Date, each Participant's Account shall be
credited with an incremental amount equal to the amount that
would have been earned had the amounts credited to the
Participant's Account been invested in an investment option
offered by the Company. At the present time, the sole
investment option offered by the Company for this Plan is the
Stable Value Option (formerly known as the Interest
Accumulation Account). The Company reserves the right to
amend the investment options in the future and, if
appropriate, to provide a method for Participants to elect
investment options that is consistent with the method
provided under the ISP. Any payments made to or on behalf of
the Participant and/or a Beneficiary shall be debited from
the Participant's Account.
2.4 Funded Nature of Account. No assets shall be
segregated or earmarked with respect to any Account, and no
Participant or Beneficiary shall have any right to assign,
transfer, pledge or hypothecate an interest or any portion
thereof in the Participant's Account. The Plan and the
crediting of Accounts hereunder shall not constitute a trust
- 9 -
or a funded arrangement of any sort and shall be merely for
the purpose of recording an unsecured contractual obligation
of each obligated party; provided, however, that the Employer
and the Company reserve the right to meet the obligations
created under the Plan through one or more trusts or other
2.5 Reduction of Benefit. If a Participant breaches an
obligation to the Company, the Employer or a Participating
Company with respect to the payment of a specific sum
of money, the Company, the Employer or the applicable
Participating Company may reduce any benefits payable to such
Participant under this Plan, in the manner of setoff or
otherwise, to the extent of such obligation and any costs
incurred with respect thereto.
In addition, the Company, the Employer and the
Participating Companies do not waive any rights to reduce
benefits, including but not limited to setoff rights, which
such entities may have under applicable law or a prior
written agreement between all or any of them and an Employee,
all of which rights are enforceable independent of the terms
of this Plan.
PAYMENT OF DEFERRED AMOUNTS
3.1 Election as to Time of Payment. Each Participant
who is an Employee on the date this restated Plan is executed
and each individual who thereafter becomes an Eligible
Employee shall make an election, on a form and in the manner
- 10 -
prescribed by the Company for this purpose, specifying the
time at which the Participant's Account Balance is to be paid.
Such election shall be made: (i) with respect to a
Participant who is an Employee on the date this restated Plan
is executed, by October 1, 1996; and (ii) with respect to an
individual who becomes an Eligible Employee after the date
this restated Plan is executed, not more than 90 days after
the date on which the individual becomes an Eligible
Employee. Any election which does not comply with these time
limits will be deemed an election pursuant to Section 3.2 and
will be effective only if it complies with the rules set
Except as otherwise provided in Section 3.2 and Section
3.4, payment of a Participant's Account Balance shall be made
to the Participant or the Participant's Beneficiary in a lump
sum as soon as practicable after the Valuation Date on or
next following the time specified for payment in the election
made by the Participant under this Section 3.1.
In the absence of an election which complies with either
Section 3.1 or Section 3.2, a Participant's Account Balance
shall be paid in a lump sum as soon as practicable after the
Valuation Date on or next following the Participant's 65th
3.2 Ability to Change Election. Notwithstanding any
election that may have been made by a Participant pursuant to
Section 3.1, a Participant may elect to receive payment of
the Account Balance at a date other than that specified by
- 11 -
the Participant in the election made pursuant to Section 3.1;
provided however that:
(a) an election made under this Section 3.2 shall apply
to Participant's entire Account Balance notwithstanding any
prior elections; and
(b) if the Participant's Termination from Service
occurs within one year and a day after the date on which the
election to change the time of payment is made, the election
shall not be honored and the Participant's Account Balance
shall be distributed in accordance with Section 3.1.
3.3 Form and Time of Payment-- Certain Terminated
This Section 3.3 applies to Participants who cease to be
Employees prior to October 1, 1996 without having made an
election pursuant to Section 3.1 hereof. Payment of the
Account Balance of any such Participant shall be made in a
lump sum at the same time as payment of the Participant's
benefits begins under the ISP, unless the Participant has
otherwise elected, prior to termination of employment, to
receive payment at a later date. To the extent that the
payment of a Participant's benefit under the ISP is suspended
pursuant to the provisions of the ISP, benefits under this
Plan shall be suspended as well.
3.4 Payment in the Event of Participant's Death.
Notwithstanding any election that may have been made by a
Participant pursuant to Section 3.1 or 3.2, any Account
Balance that has not been paid to the Participant as of the
date of the Participant's death shall be paid to the
- 12 -
Participant's Beneficiary in a lump sum as soon as
practicable after the Valuation Date on or next following the
date on which the Company receives notification of the
3.5 Acceleration of Payment. Notwithstanding any other
provision of this Plan to the contrary, the Company in its
sole discretion may accelerate the payment of Account
Balances: (a) to all or any group of similarly situated
Participants, whether before or after the Participants'
termination of service, in response to changes in the tax
laws or accounting principles; (b) to any Participant in the
event of an extreme hardship of such Participant that cannot
be relieved from any other financial resources of such
Participant; or (c) to any Participant in the event of other
MANAGEMENT OF THE PLAN
4.1 Administrator. The Employer shall be the
Administrator with the sole responsibility for the
administration of the Plan. The Administrator may delegate
to any person or entity any powers or duties of the
Administrator under the Plan. To the extent of any such
delegation, the delegatee shall become responsible for
administration of the Plan, and references to the
Administrator shall apply instead to the delegatee. Any
action by the Employer assigning any of its responsibilities
as Administrator to specific persons who are directors,
- 13 -
officers, or employees of the Employer, the Company, or the
Participating Companies shall not constitute delegation of
the Administrator's responsibilities but rather shall be
treated as the manner in which the Employer has determined
internally to discharge such responsibility.
4.2 Powers and Duties of the Administrator. The
Administrator shall have such duties and powers as may be
necessary to discharge its duties hereunder, including, but
not by way of limitation, the following:
(a) to construe and interpret the Plan, decide all
questions of eligibility, determine the status and rights of
Participants, and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to receive from the Participating Companies and
from Participants such information as shall be necessary for
the proper administration of the Plan;
(c) to furnish the Participating Companies, upon
request, such annual reports with respect to the
administration of the Plan as are reasonable and appropriate;
(d) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems
advisable, including legal and actuarial counsel;
(e) to defend and initiate any lawsuit on behalf of the
Plan or the Eligible Employees if the Administrator deems it
reasonably necessary to protect the Plan or the Participants.
If there shall arise any misunderstanding or ambiguity
concerning the meaning of any of the provisions of the Plan
- 14 -
arising out of the administration thereof, the Administrator
shall have the sole right to construe such provisions.
Subject to the limitations of the Plan and applicable law,
the Administrator may make such rules and regulations as it
deems necessary or proper for the administration of the Plan
and the transaction of business thereunder.
The decisions of the Administrator with respect to any
matter it is empowered to act on shall be made by it in its
sole discretion based on the Plan documents and shall be
final, conclusive and binding on all persons.
AMENDMENT AND TERMINATION
5.1 Amendments. The Company reserves the right to
amend this Plan from time to time in any respect, including
without limitation a prospective reduction in accrual of
benefits. See Section 5.4 regarding prohibition of
retroactive reduction of benefits accrued under this Plan.
5.2 Action by Company. Any amendments to this Plan by
the Company shall be made in writing and executed by the
Senior Vice President, Aetna Human Resources or other officer
holding such position, or by the President or Chief Executive
Officer of the Company. Neither the consent of any Employee
nor that of any payee is required for any amendment to the
5.3 Termination by Company. The Plan may be terminated
in whole or in part by the Company at any time. The Plan as
a whole shall be terminated only pursuant to a resolution of
- 15 -
the Board of Directors of the Company. The Plan may be
terminated in part in the same manner as is prescribed for
the adoption of amendments. Neither the consent of any
Employee nor that of any payee is required for any
termination of the Plan.
5.4 Effect of Amendment or Termination by Company. Any
amendment or termination of this Plan by the Company shall be
effective prospectively and shall not serve to retroactively
reduce any right to a benefit accrued under this Plan up to
the date of such amendment or termination.
ADOPTION BY AFFILIATE
6.1 Adoption by Affiliate. Any Affiliate, other than a
Physician Group, may, with the consent of the Company, become
a Participating Company under the Plan by a resolution of the
Board of Directors of the Affiliate under which:
(a) The Affiliate shall agree to be bound by all the
provisions of the Plan in the manner set forth herein and any
amendments hereto; and
(b) The Affiliate shall agree to pay its share of
expenses of the Plan as they may be determined by the Company
from time to time.
6.2 Termination by a Participating Company. Any
Participating Company may at any time elect to terminate its
participation under the Plan with respect to all or any group
of the Participating Company's Employees. Notwithstanding
the provisions of Article V, a Participating Company shall
terminate its participation under the Plan by resolution of
the Board of Directors of the Participating Company. The
termination of participation by a Participating Company shall
- 16 -
not relieve the Participating Company of its liabilities
under this Plan, including but not limited to those
liabilities imposed under Section 7.2 hereof.
7.1 Exclusive Benefit. The Plan is maintained for the
exclusive benefit of Participants.
7.2 Source of Payment. All benefits under the Plan
shall be paid exclusively by the Employer or the applicable
Participating Company from its general assets, provided that
the Company shall be liable for all benefits under the Plan.
7.3 Rights of Employees. Nothing contained herein
shall be deemed to give any Employee the right to be retained
in the service of the Employer or the applicable
Participating Company or to interfere with the right of the
Employer or the applicable Participating Company to discharge
such Employee at any time, nor shall it be deemed to give the
Employer or the applicable Participating Company the right to
require the Employee to remain in its service, nor shall it
interfere with the right of the Employer or the applicable
Participating Company to terminate service at any time.
7.4 Headings. The headings of the Plan are inserted
for convenience of reference only and shall have no effect
upon the meaning of the provisions hereof.
- 17 -
7.5 Severability. If any provision of this Plan is
held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision, and
this Plan shall be construed and enforced as if such
provision were omitted.
7.6 Alienation of Benefits. Except as otherwise
provided by law, and consistent with Section 2.4 hereof, no
benefit under this Plan may be voluntarily or involuntarily
assigned or alienated.
7.7 Lost Distributees. Any benefit payable hereunder
shall be deemed forfeited if the distributee to whom payment
is due cannot be located, provided that such benefit shall be
reinstated if a claim is made by the distributee for the
forfeited benefit within two years of the date the forfeited
benefit was payable pursuant to Sections 3.1, 3.2 and 3.3.
7.8 Governing Law. This Plan shall be construed
according to the laws of the State of Connecticut to the
extent not pre-empted by Federal law.
- 18 -
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officer this 22nd day of August,
By:/s/ Mary A. Champlin
Mary Ann Champlin
Senior Vice President
Aetna Human Resources
\s\ Michele G. Kostin
- 19 -
LIST OF PHYSICIAN GROUPS
Airport Managed Care, Inc.
Gateway Medical Group I, Inc.
Gateway Women's Health Center, A Medical Group, Inc.
Gateway Medical Group XI, Inc.
Concord Medical Group, Inc.
Gateway Medical Group IV, Inc.
Gateway Orthopedic Medical Group, Inc.
GMG-LAX Medical Group, Inc.
Rancho Medical Group, Incorporated
Las Posas Family Practice Medical Group, A Professional
Ventura Private Practice Group, Inc.
Lombard Medical Group, Inc.
Santa Clarita Medical Group, Inc.
a/k/a Henry Mayo Newhall Family Medical Center
North Texas Dental Care Associates, P.A.
Ohio Primary Care Associates, P.A., Inc.
Pennsylvania Primary Care Associates, P.C.
Mid Atlantic Primary Care Associates, P.C.
North Carolina Primary Care Associates, P.C.
New Jersey Primary Care Associates, Inc.
Wheaton Clinic, S.C.
Chicago Medical Associates, S.C.
Atlanta Primary Care Associates
North Texas Primary Care
- 20 -
LIST OF PARTICIPATING COMPANIES
A. B. C.
Schedule of Participating Number of End of
Companies Employer Year
Aetna Service, Inc.** 06-0843808 12/31
The Aetna Casualty and 06-6033504 12/31
Aetna Life Insurance
Company 06-6033492 12/31
The Standard Fire 06-6033509 12/31
Aetna Life Insurance and
Annuity Company 71-0294708 12/31
International, Incorporated 87-0300539 12/31
*Coverage ceased effective April 2, 1996. Travelers/Aetna
Property Casualty Corporation ('TAPCO') has assumed liabilities
of, and agreed to make all payments to, employees of this
**Formerly Aetna Life and Casualty Company.
- 21 -