CarMax, Inc. Health Care Plan Procedures for Qualified ...

CarMax, Inc. Health Care Plan

Procedures for
Qualified Medical Child Support Orders

As of July 1, 2013

(For Distribution to Employees upon Request or Receipt of a Medical Support Order)

Section I. General

This document sets forth procedures that the CarMax, Inc. Health Care Plan (the
“Plan”) will follow to determine whether medical child support orders, including National
Medical Support Notices (“NMSNs”), are qualified medical child support orders (“QMCSOs”)
and to administer the provision of Plan benefits under QMCSOs.

The Plan is not required to provide coverage in accordance with a medical child
support order or NMSN unless it is a QMCSO. The Plan Administrator has full discretion
and authority to interpret these QMCSO procedures and to determine whether a medical
child support order or NMSN is a QMCSO that must be given effect under the Plan. If the
Plan receives a medical child support order or NMSN that is not a QMCSO, the Plan will not
provide benefits to the child that is the subject of that order or NMSN unless the child is
otherwise eligible to participate in the Plan or the order's or NMSN's deficiencies are
corrected.

Section II. Definitions

A. Alternate Recipient. Any child of (including a child adopted by, or placed for
adoption with) an Eligible Employee who is an Eligible Dependent, as defined by the
Plan and who is recognized under a medical child support order as having a right to
enrollment under the Plan with respect to such Eligible Employee.

B. Custodial Parent. The custodial parent of an Alternate Recipient.

C. Eligible Employee. An employee who is eligible for coverage under the Plan, in
accordance with the Plan document.

D. Plan. The CarMax, Inc. Health Care Plan, a component program of the CarMax,
Inc. Master Welfare Plan.

E. Plan Administrator. The Benefits Administrative Committee of CarMax, Inc.

F. QMCSO. A Qualified Medical Child Support Order, as defined under ERISA
§ 609(a)(2) and determined by the Plan Administrator in accordance with Section III
below.

Section III. Procedures

A. Designation of Representative. The Plan Administrator will send notices with
respect to a medical child support order to the Custodial Parent or other
representative set forth in the court order or NMSN. If the Alternate Recipient
wishes to designate any other representative to receive copies of such notices, the

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Alternate Recipient must submit a written request with the name and mailing
address of such individual to the Plan Administrator.

B. Procedures upon Receipt of a Medical Child Support Order. Upon receipt of a
medical child support order:

1. The Plan Administrator will promptly send a copy of the order to its third-
party administrator, ADP, Inc. (“ADP”).

2. ADP will promptly notify the Eligible Employee and each Alternate Recipient
(and their designated representatives, if any) in writing of the receipt of such
order and send a copy of these QMCSO procedures to the Eligible
Employee and Alternate Recipient(s) (and their designated representatives,
if any);

3. ADP will review the order to determine preliminarily if it meets the legal
requirements of a QMCSO, as set forth in the section below entitled
"QMCSO Requirements" and will send its recommendation to the Plan
Administrator;

4. The Plan Administrator will review the order, along with ADP’s
recommendation, determine whether the order is a QMSCO, and notify ADP
of its decision;

5. Within a reasonable period after the Plan Administrator’s receipt of the
medical child support order, ADP will notify the Eligible Employee and each
Alternate Recipient (and their designated representatives, if any) in writing
of the Plan Administrator’s determination as to whether the order is a
QMCSO. If the order is not a QMCSO, the notice will include an explanation
of any defective or missing provisions.

6. If the order is determined to be a QMCSO and the Plan requires any
additional information to process the Alternative Recipient’s enrollment, ADP
will contact each Alternate Recipient (and their designated representatives,
if any) with a request for such information. The Alternate Recipient (or
his/her designated representative) must provide the necessary information
to be eligible to receive Plan benefits. For example, if the Alternate
Recipient’s date of birth is not provided in the QMCSO, ADP will not be able
to enroll the Alternate Recipient until receiving such information.

7. QMCSO Requirements. To be a QMCSO, a medical child support order
must meet the requirements of ERISA § 609(a), as amended, as set forth
below:

a. The medical child support order must be a judgment, decree, or
order (including approval of a settlement agreement) that is:

(i) issued by a court of competent jurisdiction or

(ii) issued through an administrative process established under
state law and has the force and effect of law under
applicable state law.

b. The medical child support order must either:

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(i) provide for child support or health benefit coverage for a
child of an Eligible Employee under the Plan pursuant to a
state domestic relations law (including a community
property law) and relate to benefits under the Plan, or

(ii) be made pursuant to a law relating to medical child support
described in Section 1908A of the Social Security Act, as
amended, with respect to the Plan.

c. The medical child support order must create or recognize the
existence of an Alternate Recipient’s right to, or assign to an
Alternate Recipient the right to, receive benefits for which an Eligible
Employee or Eligible Dependent is eligible under the Plan.

d. The medical child support order must include:

(i) the full name and last known mailing address of the Eligible
Employee; and

(ii) the full name and last known mailing address of each
Alternate Recipient covered by the order, except that, to the
extent provided in the order, the name and mailing address
of an official of a state or political subdivision may be
substituted for the mailing address of an Alternate
Recipient.

e. The medical child support order must include a reasonable
description of the type of coverage to be provided by the Plan to
each Alternate Recipient, or the manner in which such type of
coverage is to be determined.

f. The medical child support order must specify the period of time to
which the order applies.

g. The medical child support order cannot require the Plan to provide
any type or form of benefit, or any option, not otherwise provided
under the Plan, except to the extent necessary to meet the
requirements of a law relating to medical child support described in
section 1908A of the Social Security Act, as amended.

8. If the Plan receives a medical child support order that does not meet the
requirements of a QMCSO under ERISA § 609(a), as described in Section
III(B)(4) above:

a. The Plan Administrator may, at its discretion, reject the order and
request any additional information necessary for the order to qualify
as a QMCSO and for the Plan to implement the order's terms.

b. The Plan Administrator may also, at its discretion, determine that
the medical child support order contains information sufficient for the
Plan to comply with the order, treat the order as a QMCSO, and
implement the terms of the order.

9. Resubmission of Order. If the Plan Administrator determines that a medical
child support order is not a QMCSO, the parties at issue may submit a

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revised order to cure any deficiencies. If a revised order is submitted, the
Plan will repeat the procedures set forth in this Section III.

C. Procedures upon Receipt of a National Medical Support Notice. Upon receipt of an
NMSN:

1. The Plan Administrator will promptly forward the notice to its third-party
administrator, ADP.

2. ADP will promptly notify the Eligible Employee and each Alternate Recipient
(and their designated representatives, if any) in writing of the receipt of such
NMSN and send a copy of these QMCSO procedures to the Eligible
Employee and Alternate Recipient(s) (and their designated representatives,
if any).

3 ADP will review the NMSN to determine preliminarily: (i) if it has been
completed properly, including that it contains the name of the issuing
agency, and in accordance with the instructions accompanying the NMSN
and (ii) if it meets the legal requirements of a QMCSO, as set forth in the
section above entitled "QMCSO Requirements" and will send its
recommendation to the Plan Administrator;

4. The Plan Administrator will review the NMSN, along with ADP’s
recommendation, determine whether the NMSN is a QMSCO, and notify
ADP of its decision;

5. Within 40 business days after the date of the NMSN, ADP will notify the
Eligible Employee, Alternate Recipient, state agency, or any designated
representatives, in accordance with the forms and instructions provided with
the NMSN, of the Plan Administrator’s determination as to whether the order
is a QMCSO. If the NMSN is not a QMCSO, the notice will include an
explanation of any defective or missing provisions. The Plan Administrator
generally will provide this notice by completing and sending the "Plan
Administrator Response" accompanying the NMSN.

6. If the NMSN is determined to be a QMCSO, ADP will provide the parties to
the NMSN with certain information such as the effective date of the child's
coverage, any steps necessary to effectuate coverage, a description of the
coverage, and any forms or documents necessary to enroll in the Plan, in
accordance with the NMSN's instructions. An Alternate Recipient (or his/her
designated representative) must comply with the Plan’s application
procedures or requests for information to be eligible to receive Plan benefits.

7. Resubmission of Order. If the Plan Administrator determines that an NMSN
is not a QMCSO, the parties at issue may submit a revised order to cure any
deficiencies. If a revised order is submitted, the Plan will repeat the
procedures set forth in this Section III.

D. Enrollment and Plan Options. If a medical child support order or NMSN is
determined by the Plan Administrator to be a QMCSO:

1. Once any requested information has been received, ADP, on behalf of the
Plan Administrator, will enroll the Alternate Recipient in the Plan option
designated in the QMCSO effective as of the date of the court order.
Additionally, the Eligible Employee will not be able to waive coverage or
remove the Alternate Recipient from coverage for the remainder of the

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period set forth in the QMCSO, unless the Plan receives a subsequent
qualified court order revoking medical child support for the Alternate
Recipient.

2. If the child support order or NMSN does not designate a Plan option, the
Plan Administrator will:

a. For Child Support Order: Enroll the Alternate Recipient in the Plan's
default option, which is:

i. the same medical coverage as the Eligible
Employee, if the Eligible Employee is already
enrolled in a medical coverage option under the
Plan; or

ii. the Plan option for Eligible Employee and Child, if
the Eligible Employee is not already enrolled in a
medical coverage option under the Plan.

b. For NMSN:

i. Provide the parties with information about the
available Plan options and direct them to make a
selection;

ii Notify the parties that the Alternate Recipient and
Eligible Employee will be enrolled in the default
option (as described above) if a response is not
received within 20 business days; and

iii Enroll the Alternate Recipient and Eligible
Employee in the option that is requested within 20
days, or if no request is made, in the applicable
default option described above.

3. In the case of an order or NMSN that requires withholding from an Eligible
Employee's paycheck in excess of federal or state withholding limitations:

a. If the order or NMSN does not specify a particular coverage option,
the Plan will enroll the Eligible Employee in the Plan’s default option
if it is possible to satisfy withholding limitations by doing so. The
Plan will give the Eligible Employee 60 days to elect a different
coverage option.

b. If the default option would require withholding in excess of federal or
state withholding limitations, the Plan will enroll the Eligible
Employee in the next lowest-cost Plan option that would satisfy
federal and state withholding limitations. The Plan will give the
Eligible Employee 60 days to elect a different coverage option.

c. If none of the Plan's coverage options would satisfy federal and
state withholding limitations, the order or NMSN will be returned to
issuing agency (if applicable) with an explanation indicating that the
combined total of withholding for child support plus withholding for

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medical child support exceeds the applicable the federal or state
withholding limits.
4. Once the Alternate Recipient is enrolled in the Plan pursuant to a QMCSO,
the Alternate Recipient’s coverage option will be carried over into each
subsequent Plan Year for the duration of time period ordered.
If you have any questions about these procedures you may contact the
MYKMXHR Service Center at (888) 695-6947. The Plan Administrator can be reached in
writing at: CarMax, Inc. – Benefits Administrative Committee, 12800 Tuckahoe Creek
Parkway, Richmond, Virginia 23238.

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