Published for Eaton U.S. Employees May 2012

EatonBenefitsHealth Wealth Lifestyle

Become a better health care consumer with these tips (page 2)

Eaton’s Health Savings Accounts (HSAs) and retirement savings plans are great ways to save for the future (page 3)

Wellness programs improve the health of Eaton employees around the globe (page 4)

Power tools Using Eaton benefits to build a better future What will your future hold? If only you knew the answer to that question.You can, though, significantly increase your chances for enjoying life in good health with adequate financial resources. How? By paying attention to your lifestyle and finances now. Eaton’s benefit programs are designed to give you the tools to support you today and help you build the future you want. Here’s a look at how they can help.

Pension and Savings Plans — A big advantage at EatonMany companies have eliminated employee pension plans, but not Eaton. Eaton sponsors a Company-paid pension for employees. After you complete three to five years of service, a pension benefit will be paid to you in a lump sum and/or payments spread out during retirement. The longer your service with Eaton, the larger your benefit will be.

On top of that, Eaton’s 401(k) plan — the Eaton Savings Plan (ESP) or Eaton Personal Investment Plan (EPIP) — is a great way to save for retirement. You choose how much to save from each paycheck and whether to pay taxes on that money now, or later when you take it out of the plan.

You choose how to invest your money, and your earnings aren’t taxed until you take them out. Depending on your plan, Eaton may make a matching contribution to your account.

If you take full advantage of them, these plans together with Social Security payments are designed to help you meet your retirement goals .

Healthy Incentives Credits — More money in your pocket now and later!At Eaton, Healthy Incentives credits lower your cost for medical plan coverage — you just have to take action to Know Your Numbers and Be Tobacco Free. During 2012, your credits are worth as much as $100 in your paycheck each month — if you and your spouse or domestic partner in the Eaton medical plan followed through last year.

Of course that monthly money’s important, but the goal of Healthy Incentives is for you to live a healthier life. When you Know Your Numbers, you become aware of possible health issues and can identify ways to lower your risk for certain lifestyle-related chronic diseases. And when you are Tobacco Free, your overall health improves. The bigger financial benefit is that avoiding chronic disease can lower your medical costs now and in retirement.

Consumer Health Options with a Health Savings Account (HSA) — Reduce current costs and save for future expensesThe Consumer Health options in Eaton’s medical plan help you take charge of the money you budget and spend for health care. You pay less from each paycheck for coverage in these options.

Plus you can save tax-free money in a Health Savings Account (HSA). Eaton contributes to your HSA to get you started. You can use your HSA money for current eligible medical expenses or save it for future use.

Your HSA balance carries over from year to year. Within a few years, you can have enough to cover the annual deductible. Over time, you can save up for medical costs during retirement.

Look on page 2 for some quick facts about the HSA.

ActiveHealth Management — Powering you to live wellTaking care of your and your family’s health reduces the total dollars you spend on medical care. That means more money to use for other things. Eaton partners with ActiveHealth Management (AHM) to help you prevent, delay or manage certain lifestyle-related diseases. These wellness services are free if you are in an Eaton medical plan.

The Health Assessment you take to earn Healthy Incentives credits is one way ActiveHealth coaches learn about your needs and reach out to you. You can also get started with an ActiveHealth program by calling at 1-877-489-9391. Or, you can go to EatonBenefits.com and click on the MyActiveHealth link.

Heads upMedco Purchased by Express Scripts Express Scripts has bought Medco, our current provider of prescription drug benefits. This deal will affect many people in the United States who have pharmacy benefits through their employers.

At Eaton, other than a new name, we won’t notice much of a change for a while. That’s because our current contract with Medco is set through 2013. The contract terms include keeping Walgreens in the provider network.

Restrictions on Pension Plan Lump Sums The Pension Protection Act (PPA) affects Eaton pension plans that offer lump sum benefit payments. The PPA legislation forced Eaton to temporarily stop making full lump sum payments in April 2009. It’s hard to know just when, but we expect that full lump sum payments will be available again in 2013 or 2014.

In the meantime, you can retire and generally take 50% of your benefit in a lump sum. You receive the other 50% in monthly pension payments. When full lump sums return, you can convert the unpaid pension payments to a lump sum payment, or to any other payment option your plan offers.

Call the Eaton Service Center at Fidelity at 1-866-EATON 01 with any questions.

Healthy Incentives: Start NOW!Don’t wait until the fall to Know Your Numbers. Look inside for details on how you can get your numbers now and make sure you earn Healthy Incentives credits for 2013.

At Eaton, 22% of you chose one of the new Consumer Health options for

2012. If you didn’t, consider making the change for 2013. Watch your expenses

carefully during 2012 and see how before-tax HSA contributions (both your own

and Eaton contributions) could help cover your costs. Learn more about these

options on EatonBenefits.com; go to Using Your Consumer Health Option and

Health Savings Accounts (HSAs) Library in the Eaton Learn More Links.

May 2012

TimelineYou cannot re-use results or actions that you used to earn Healthy Incentives credits last year. Generally you must take new actions between December 1, 2011 and October 31, 2012 to earn Healthy Incentives credits to reduce your 2013 medical plan contributions.

Get Fit Challenge

Do you know how much you can benefit?Check out these programs to make the most of your Eaton medical coverage:Did you know Eaton provides free PREVENTIVE CARE SERVICES? You don’t pay anything for a routine in-network physical exam, associated lab tests, immunizations and flu shots. Other free services include well-baby checkups, vision and hearing screenings, visits with a dietician, and recommended screenings for certain cancers.

Eaton also pays the full cost of certain generic PREVENTIVE CARE DRUGS. The Consumer Health options cover the broadest range of generic drugs — and brand name drugs when generics aren’t available for some conditions.

You’ve talked with an Eaton Health Plan Partner — perhaps Anthem, Delta or Medco — and you still don’t understand why a claim hasn’t been paid or what you need to do to resolve an issue. You can get support: the HEALTHCARE HELPLINE at the Eaton Service Center at Fidelity. Call 1-866-EATON 01 and select Health and Insurance to find an advocate.

When you go to the MYACTIVEHEALTH WEBSITE through EatonBenefits.com, you can find personalized health and wellness information along with tools and answers to many health care questions. ActiveHealth also gives you access to a wide variety of programs to help you with your individual health needs:

• ENHANCED CARE MANAGEMENT can give you a better understanding of chronic conditions like asthma, diabetes and MS. Plus, you’ll talk with someone who can answer your questions about medications and test results.

• The CANCER MANAGEMENT program puts an oncology nurse just a phone call away. You’ll have help understanding your treatment options and the benefits and risks of each. Your contact can guide you in recognizing early signs of complications and provide advice for managing side effects.

• The MATERNITY MANAGEMENT program is available to you throughout your pregnancy.

• ACTIVEHEALTH LIFESTYLE COACHING can identify what efforts are likely to have the biggest impact on your health. Team members can assist you in making positive changes like reducing stress or eating healthier.

• Do you have other questions? Maybe you’re wondering if you should go to a doctor for your symptoms. Or you’re desperately trying to get your baby’s fever down. The EATON ACTIVEHEALTH TEAM can troubleshoot medical problems for you and identify next steps 24/7.

Just call 1-877-489-9391 or go to EatonBenefits.com and click on MyActiveHealth to get started with these programs.

Quick facts about your Health Savings Account (HSA)Participants in Eaton’s Consumer Health options also have a Health Savings Account (HSA). You are in charge of the money in your HSA — you can use it for eligible medical expenses now, or build your balance for the future.

If you haven’t already opened your HSA, complete the online HSA application through EatonBenefits.com.

You can set up before-tax payroll deductions to your HSA by calling the Eaton Service Center at Fidelity anytime at 1-866-EATON 01, or you can deposit HSA contributions directly to your account and claim them as income tax deductions.

You can increase, decrease or stop your employee contributions to the HSA by calling the Eaton Service Center at Fidelity at any time.

The most you can contribute to the HSA this year is $3,100 for an individual and $6,250 for a family. That total includes what Eaton put in.

If you’re age 55 or older, you can contribute an additional $1,000 each year.

If your spouse also has an HSA, your combined contributions can’t exceed the IRS annual limits.

It’s your responsibility to make sure your total HSA contributions do not go over these IRS annual limits.

Eaton contributed to your 2012 HSA: $400 for Employee only coverage, and $800 for Employee + Others.

Call the Eaton Service Center at Fidelity to request reimbursement from your HSA. A check for your eligible medical expenses can be mailed to you or the amount can be electronically transferred to your bank account.

Your HSA balance rolls over from year to year.

You can take your HSA with you when your Eaton employment ends.

Once you meet minimum balance requirements, you choose how to invest the money in your HSA. Talk with the Eaton Service Center at Fidelity for more information.

Need a checkbook or another debit card to make payments from your account? Contact the Eaton Service Center at Fidelity.

Look in the Eaton Learn More Links on EatonBenefits.com for another copy of your user’s guide booklet “Using Your Eaton Health Savings Account.” You can find it through the Using Your Consumer Health Option and Health Savings Accounts (HSAs) Library link.

Go to EatonBenefits.com or call AHM at 1-877-489-9391 to:• Take or update your Health Assessment• Certify you are Tobacco Free or enroll in the AHM Tobacco Cessation Program

Sign up for an on-site or Quest Diagnostics lab screening to Know Your Numbers. Use the online scheduler on EatonBenefits.com or call Quest at 1-866-908-9440.

MAY JUNE

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Receive enrollment materials at your home at the end of the month Annual enrollment October 9 through October 31

• Complete Health Assessment• Complete Tobacco Free requirement

3May 2012

your health and your wealth when you quit using tobaccoMost people are aware of the health risks of tobacco use. But the drain on your wealth is steep, too. With cigarettes usually costing about $4.50 per pack, the average smoker spends more than $1,600 per year on cigarettes. Invested for 30 years, that’s $130,000 — just think what else you could do with that money!

And when you add your cigarette savings together with your monthly Healthy Incentives credit for Being Tobacco Free, the lower non-tobacco user employee optional life insurance rates and a lowered risk of tobacco-related diseases, your savings goes way up. (See the Healthy Incentives insert for more information about earning your Be Tobacco Free Healthy Incentives credit.)

Eaton’s free Tobacco Cessation Program can help you kick the habit. To get started, call ActiveHealth at 1-877-489-9391 starting June 1. A tobacco cessation specialist will work with you over the phone to prepare you to quit, develop coping strategies and determine what types of therapies are most appropriate for you.

Eaton Employees Quitting TobaccoSince it started in 2010, the Tobacco Cessation Program has had almost 2,000 participants. With a success rate of 45%, that means close to 900 Eaton employees or their dependents have quit using tobacco. That’s the biggest step you can take to improve your health status — and put some cash back in your pocket. Congratulations!

SAVE

Your doorway for wellness, information and actionVisit EatonBenfits.com for tools and resources to help you make the most of your benefits. The Eaton Learn More Links cover topics such as:

• Using your Consumer Health options

• Your Eaton free preventive benefits

• Frequently asked questions

EatonBenefits.com

Taxes and your HSAWhen you use your HSA during the year to pay for medical expenses, Fidelity sends you a Form 1099-SA at the start of the next year. This form shows the amounts you took out from your HSA during the year — through your HSA checkbook, debit card or a payback to yourself from your HSA. You should report these amounts on a Form 8889 when you file your taxes for the year. This makes sure you don’t get taxed on those amounts.

Sign up for an on-site or Quest Diagnostics lab screening to Know Your Numbers. Use the online scheduler on EatonBenefits.com or call Quest at 1-866-908-9440.

SEPTEMBER OCTOBER

Four ways to pay with your HSA When you have an eligible medical expense and you want to use the money in your HSA to pay for it, you have four choices. You can:

• Use your Fidelity HSA debit card to pay at a pharmacy and other providers. Be sure to wait for EOBs for medical claims so that the Eaton discounts have been applied.

• Write a check from your Fidelity HSA checkbook.

• Send electronic payments using Fidelity BillPay.

• Use your own money upfront and then withdraw an equal amount from your HSA to pay yourself back. You can pay yourself back by:

— writing a check from your HSA checkbook.

— sending a Fidelity BillPay electronic payment to yourself.

— requesting that a payment from your HSA be mailed to you or transferred to another account.

You can request an HSA debit card or checkbook and you can sign up for Fidelity BillPay when you sign up for your HSA. You can also do this anytime during the year through the Eaton Service Center at Fidelity by calling 1-866-EATON 01.

The amount available for payouts is the actual balance in your account on any given day. Contributions must be received and credited to your account before they are available. If you have insufficient funds in your HSA “core account” to cover an expense, a debit card or BillPay payment will be rejected or a check will bounce. You have to have enough on hand to cover the full cost when it is presented.

Keep records of all the expenses you pay from your HSA. The money you withdraw from your HSA to pay qualified medical expenses isn’t taxable and you will need to report the amount on Form 8889 when you file your federal taxes. You don’t have to send the actual records in with your tax return, but you must hold on to them in case of an IRS audit.

Know when to hold ‘emYou can always use your HSA balance to pay for eligible expenses your medical plan doesn’t cover. But, there may be times when it makes sense to pay for expenses out of your current budget and keep your money in your HSA so it can continue to grow tax-free.

If your budget allows it, HSAs are a great way to saveLike a 401(k) or IRA, the money you save in an HSA goes in before taxes and your savings grow tax-free.

The unique advantage of the HSA is that if you use the withdrawal for eligible medical expenses, it’s never taxed. Eligible expenses include medical plan deductibles and coinsurance, and premiums for COBRA coverage, retiree plans and Medicare supplemental plans.

After age 65 or if you become disabled, HSA withdrawals for non-medical expenses are not penalized. They are taxed as ordinary income, just like a withdrawal from a 401(k) or IRA.

Type of savings vehicle

Contributions

Investment earnings

Withdrawals

Penalties for early withdrawal

Roth IRA After-tax Not taxed Not taxed Before age 55, 10% penalty applies to earnings

401(k) before-tax or regular IRA

Before-tax Not taxed Taxed as ordinary income

Before age 55, 10% penalty applies

401(k) after-tax After-tax Not taxed Earnings taxed as ordinary income

Before age 55, 10% penalty applies to earnings

HSA Before-tax Not taxed

Not taxed if used for medical expensesTaxed as ordinary income if used for anything else

Before age 65, 20% penalty applies if not used for eligible medical expenses

• Complete Know Your Numbers screening

OCTOBER

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Eaton Corporation1111 Superior Avenue Cleveland, OH 44114

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3.EA-H-304BD.100

May 2012

Powering employees to live well around the worldEaton locations around the world are embracing wellness initiatives. From “Biggest Loser” weight loss competitions and exercise challenges to on-site fitness classes and wellness seminars, Eaton is powering you to live well.

Shanghai reduces stressYoga class in the fitness center in Shanghai.

3 cheers for meeting the challenge!Jackson, Michigan employees hold the banner signed by employees planning to take advantage of Eaton’s wellness initiative.

They’re cheering their second place finish in Eaton’s 2011 U.S. Step Challenge. Dan Lindsay (both arms raised) came in 5th overall at Eaton with 1.1 million steps!

$10,000 winners!Lincoln, Illinois Plant Wellness Team Members collect the first place award — along with $10,000 worth of fitness equipment installed at their location — for winning the 2011 Manufacturing Miles Competition. Participants took the prize by walking more than 81,000 miles. Lincoln SPC Specialist Carl Cox contributed almost 10,000 of those miles.

Wellness comes to IndiaTruck drivers met up to discuss health issues related to their work in India.

I switched to a Consumer Health option for my medical coverage this year, and I had to pay $400 for my first prescription! How is this a more “consumer-minded” option?

Sincerely, Pain in My Wallet

Dear Pain in My Wallet,

I totally understand your concern. The high cost of a medication can be a pain in itself. While you had quite a surprise, you learned a lot about the real costs of buying health care.

After the sticker shock, remember, you received free Eaton money in your Health Savings Account at the start of the year. You can use that money to help pay for things as you work toward meeting the annual deductible. Plus, your contributions for medical coverage are lower with the Consumer Health options.

In earlier medical plans, coinsurance hid the actual cost of the drug. With the Consumer Health options, all expenses you have — medical and prescription drug alike — go toward meeting your annual deductible. And when you reach the annual deductible, you and the plan will share costs, with the plan paying 80% or 90% depending on your option. If you reach the annual out-of-pocket maximum, the plan will start to pay 100% for the rest of the year.

Here are some tips — think of them as a Buyer’s Guide — for learning to use your Consumer Health option:

• Use generics when available. If a generic isn’t available, make sure to use drugs on the formulary.

• Shop around. Prices vary from drugstore to drugstore.

• Use the dollars in your HSA, including the Eaton start-up money, to cover or offset the cost.

• Ask your doctor if there are other treatment options available and what the cost would be.

• Call Medco and ask to talk with a pharmacist to get suggestions.

Starting in 2012, all the Eaton medical options cover certain generic preventive drugs at no cost. The Consumer Health options cover even more, including some brand name drugs when no generic is available. More information and a list of preventive drugs can be found on EatonBenefits.com or in your summary plan description.

By planning for your purchases and making the most of your Eaton medical plan options, you may even find your prescription drug costs go down.

Dear Joe

Any differences between this brochure and the Plan Documents are not intended, but if any differences are found to exist, the Plan Documents will govern. The Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), is a federal law that requires your health plans to protect the confidentiality of your private health information. The information contained in this brochure has been provided by Eaton and is the sole responsibility of Eaton.