FY21 Care Share Announcement

Dear Cook Children’s Team Member,

For more than a year and a half now, we’ve worked to let you know how valued you are and how appreciative we are of your service. I hope Friday’s announcement was just one more example of just how much we care.

We’ve called you heroes the last 19 months, and in those moments when you were so tired and wondered if you could respond to COVID one more day, you found a way to show up for work and provide the very best care anywhere in the nation.

While others may have wavered, you stayed committed to Our Promise, and the patients and families we serve.

You stayed laser focused on the Patient, Family and Member Experience, while we strived to support you and the work happening in the Team Experience and the Quality & Safety Experience.

For everything you’ve done, we want to say thank you.

We mentioned Care Share in last week’s video, but today we want to provide you with more specifics.

All of FY’21 was spent responding to COVID-19, yet our patient satisfaction numbers exceeded the Children’s Hospital Association (CHA) average, the Health Plan surpassed the NCQA average, and we met our financial measures.

FY’21 Care Share Results

This is more great news to share and celebrate!

Despite the toughest season in our history, you did it!

We are very proud to tell you that you will receive a Care Share fiscal year 2021 bonus payout, and it will be distributed via direct deposit and appear on your Friday, Nov. 12, 2021 paycheck. Please remember that employees in good standing are eligible for this bonus, excluding physicians, directors and above, and those that did not reach the requirement for minimum productive hours for the plan year. Please read all the specifics of the Care Share FY’21 incentive plan and additional tax information for Care Share at the end of this document.

I also want to share with you what we can expect for Care Share in FY22. These will be our targets:

Thank you for all that you’ve done to help us deliver on our Promise, and we are grateful for your commitment to our experience standards: Connect, Collaborate and Elevate.

May you continue to relate human to human, listen and partner with one another, and reflect as we take our next steps together.

After all, that’s how we will continue to move forward and serve the children and families in our care … by all of us staying connected and working together.

Thanks, again, and congratulations on a job well done!

Rick W. Merrill, President & CEO

On behalf of Cook Children’s Entire Leadership Team

Cook Children’s Care Share Incentive Program

PURPOSE: The Plan provides the opportunity for participants to earn annual, performance-based incentive awards as part of their total compensation program. The Plan is intended to:

• Link the program as closely as possible to Cook Children’s financial performance, quality and patient safety.
• To promote a caring and collaborative environment for our patients, families and one another that contributes to improved patient satisfaction and quality outcomes for our patients. We all influence the experience here at Cook Children’s -- for our patients, their families, our visitors and each other.

PLAN EFFECTIVE DATE: October 1, 2020

PLAN TERM: October 1, 2020 – September 30, 2021

GENERAL ELIGIBILITY:

• All employees in good standing up through manager, excluding physicians.
• All full-time, half-time, part-time, pool and PRN employees working 80.01 or more hours during the plan year and are in an active status on the payout date are eligible for an incentive.
  • Employees who terminate employment between the last day of the plan year and the date of the payout are not eligible to receive the incentive payment.
• Temporary employees are not eligible for an incentive.
• Employees who have received a final written warning or above, during the plan year, are not eligible for an incentive.
• Employees who are on a Leave of Absence at the time of payout are eligible and will receive their incentive on the payout date.

METRICS:

• Financial System Performance – 2% Operating Margin (Circuit Breaker)
  • A 2% Operating Margin must be achieved before any incentive award can be paid.
  • CCHCS, CCMC, CCPN and CCHH – Exceeding the CHA average patient satisfaction score mean.
    • Calculations will be based on a twelve (12) month rolling average
    • Note: CHA does not have a Health Plan survey component.
  • CCHP – Exceed NCQA CAHPS Industry average score mean

AWARD PAYOUT PERCENTAGE POTENTIAL:

*Minimum number of productive hours an employee must work.

PLAN PAYOUT DATE:

• Paid as a lump sum as soon as practical after the end of the Plan year. Payout date will be November 12, 2021. All payments will be grossed up by 22%.

PRORATION RULES:

• New hire: as long as an employee achieves the minimum amount of hours, s/he will be eligible to participate and receive an incentive based on the eligible work hours.
• Rehire: if an employee terminates employment and is rehired during the same fiscal year, as long as s/he is on payroll and achieves the minimum amount of hours, s/he will be eligible to participate and receive an incentive based on the eligible work hours.
• Promotion: no change in eligibility based on promotion, unless an employee is promoted into a position eligible for the Managerial Incentive Plan.
• Demotion: no change in eligibility based on demotion.
• Transfer: no change in eligibility based on promotion, unless an employee is promoted into a position eligible for the Managerial Incentive Plan.
• Termination: In order to receive a payment, an employee must:
  • Be active on the last day of the plan year
  • Be active on the incentive payment date AND
  • Be in good standing in order to receive the payout.
• Death, disability or retirement: may be authorized and paid, however the employee must achieve the minimum amount of hours to be eligible.
• Metric achievement will be based on the company the employee is in as of the last day of the plan year.
• Productive Hours: are based upon full pay periods during the plan year.

PAYMENT OF AWARDS:

• Awards will be paid as determined by the President and CEO, and Chief Administrative Officer.

PAYROLL ISSUES:

• Incentive pay is considered earnings for the 403(b) plan. For employees enrolled in the 403(b) retirement plan, deductions will be taken from incentive payments based on 403(b) election and applicable legal limits.

TAX IMPLICATIONS:

• Cook Children’s typically includes incentive compensation with the employee’s regular base pay check. Federal and State taxes are withheld at the supplemental rate as mandated/required by Federal and State agencies for incentive/bonus pay. Additionally, Social Security and other Federal or State deductions will also be taken.

AMENDMENT OR TERMINATION OF PROGRAM:

• Cook Children’s Health Care System, by the action of the Chief Administrative Officer or the President and CEO of the system, reserves the right to amend or terminate this plan at any time.

TERMS OF EMPLOYMENT:

• Nothing in this plan will limit Cook Children’s right to terminate an individual’s employment at any time.

Care Share Bonus tax treatment information

For employees eligible for the FY2021 Care Share incentive, this bonus will be included in your Nov. 12, 2021 paycheck and appear as “Incentive Bonus” in the Wages section.

Please note that this bonus is subject to taxes under IRS rules. To help offset some of this tax burden, we plan to increase your wages by 22% of the bonus amount. This extra payment will appear on your paycheck as “Gross Up” in the Wages section.

For example:

If you receive a $500.00 bonus, we will pay you an extra $110.00. If you receive a $250.00 bonus, we will pay you an extra $55.00. If you receive a $75.00 bonus, we will pay you an extra $16.50.

Please remember these key points as you review your paycheck:

• The Wages section of your next paycheck will include the amount of the Care Share incentive bonus you received.
• We will increase your paycheck by 22% of the bonus amount (i.e., Gross Up). This represents an additional cash payment to help offset some of the taxes you pay on the bonus.
• The amount of the Gross Up you receive may or may not cover all the additional income tax you pay since each employee has her/his own unique tax situation.

Below is an example of how the bonus and gross up amounts will appear on your Lawson Employee Self Service printable pay stub: