Healthcare Provider Update: Healthcare Provider for ExxonMobil For the upcoming year, ExxonMobil's primary healthcare provider is Blue Cross and Blue Shield of Texas (BCBSTX). Effective from January 1, 2025, employees and their families will access healthcare through BCBSTX, ensuring improved network access and support for managing healthcare costs. Prescription drug services will continue to be provided by Express Scripts. Potential Healthcare Cost Increases in 2026 In 2026, ExxonMobil may experience significant healthcare cost increases, paralleling broader trends in the Affordable Care Act (ACA) marketplace. With some states projecting premium hikes of over 60% and the potential loss of enhanced federal premium subsidies, many employees could see their out-of-pocket costs escalate dramatically. The Kaiser Family Foundation has highlighted that without congressional action, most marketplace enrollees might face increases exceeding 75%. These combined pressures will necessitate careful planning and strategic healthcare decisions from ExxonMobil employees going into 2026. Click here to learn more
What Is Private Equity?
Many of our ExxonMobil clients have been curious to know more about private equity. Like stock shares, private equity represents an ownership interest in a company. However, unlike stocks, private equity investments are not listed or traded on a public market or exchange (though some firms that specialize in making private equity investments are publicly traded). Private equity firms are not necessarily required to register with the SEC. Also, firms that manage private equity investments may be more directly involved with management of the individual business or businesses than the average shareholder.
Private equity often requires a long-term focus before investments begin to produce any meaningful cash flow--if indeed they ever do. Private equity also typically requires a relatively large investment and is available only to qualified investors such as pension funds, institutional investors and wealthy individuals.
The Many Faces of Private Equity
Now, many ExxonMobil employees may be wondering what forms private equity can take. Here are some examples:
- Angel investors are individual investors who provide capital to startup companies and may have a personal stake in the venture, providing business expertise, industry experience and contacts as well as capital.
- Venture capital funds invest in companies that are in the early to mid-growth stages of their development and may not yet have a meaningful cash flow or earnings. In exchange, the venture capital fund receives a stake in the company.
- Mezzanine financing occurs when private investors agree to lend money to an established company in exchange for a stake in the company if the debt is not completely repaid on time. It is often used to finance expansion or acquisitions and is typically subordinated to other debt. As a result, from an investor's standpoint, mezzanine financing can be rewarding because the interest paid on the loan can be high.
- Distressed-debt firms specialize in taking over the debt of troubled companies, such as those that are in or on the verge of bankruptcy. They frequently function as private equity firms by forgiving the company's debt in exchange for equity. They often are influential in restructuring or liquidating the company in order to recoup their investment.
- Buyouts occur when private investors--often part of a private equity fund--purchase all or part of a public company and take it private. Those investors believe that either the company is undervalued or that they can improve its profitability and sell it later at a higher price, in some cases by combining it with other companies. In some cases, the private investors are the company's executives, and the process is known as a 'management buyout (MBO).' A leveraged buyout (LBO) is financed not only with investor capital but with bonds issued by the private equity group to pay for purchase of the outstanding stock. Buyouts were the subject of books such as Barbarians at the Gate, about the 1988 buyout of RJR Nabisco, and the movie Wall Street. However, buyouts today are typically less hostile than those of the late 1980s; for example, deals often involve the spinoff of a division of a large company or the sale of a family-owned business.
- PIPE is an acronym for Private Investment in Public Equity. PIPEs are transactions in which private investors (often hedge funds or private equity firms) buy unregistered securities issued by corporations. In many cases the company eventually registers those shares with the SEC; that registration allows the private investors to resell those shares to the general public.
PIPEs are popular with companies that need to raise cash more quickly than would be possible with a typical stock offering. In some cases, a PIPE leads to an eventual buyout.
Prior to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, private equity investment advisors were generally exempt from SEC registration. However, the Dodd-Frank legislation required that as of mid-2011, private fund advisors with $150 million or more in assets under management are generally required to register with the SEC. Individual states are responsible for the regulation of funds with less than $150 million in assets, though they can choose to exempt private funds from registration requirements.
With the expansion of both private equity and hedge funds, the two have begun to overlap in some areas. For example, some firms have begun to offer both hedge funds and private equity investment opportunities.
Private Equity and Limited Partnerships
Now, we'd like to make sure our ExxonMobil clients understand Limited Partnerships. Investors in private equity often do so through a limited partnership (LP). A limited partnership is a form of business organization that comprises one or more general partners and one or more limited partners. The general partner manages the organization and has unlimited liability regarding the debts and obligations of the business. The limited partners are passive investors; they provide capital, enjoy limited liability, and forgo an active management role. Federal income tax is not imposed at the partnership level; instead, financial and tax events flow directly through to the individual or institutional investors. If you invest in a private-equity LP, therefore, you report on your individual tax return only your share of the business's income, gains, losses, and deductions (see 'Tax Considerations,' below).
As an investment vehicle, LPs were considered a very effective tax shelter prior to the Tax Reform Act of 1986. However, as a result of the Act, partnership losses can be deducted only if you have passive gains from another investment to match against them (see below). Although some LPs now emphasize income, appreciation, and safety, their ability to shelter cash flow and their value purely as a tax shelter has been drastically curtailed. A limited partnership may be either private, as in the case of private equity, or public. A publicly traded limited partnership is known as a master limited partnership.
How Can I Invest In a Private Equity Firm?
It's also important that our ExxonMobil employees understand how to invest in a private equity firm. Because private equity often requires such a substantial investment, it can be difficult for individual investors to get access to these investment opportunities. For the most sought-after firms, a million-dollar minimum commitment is not at all unusual. Also, even those considered qualified to invest in private equity may not be able to invest with a given firm; because of the demand for their services, the most sought-after firms are able to pick and choose whom they allow to invest. Requirements for private-equity investing vary widely.
For the most informal arrangements--for example, seed-money investments by an individual investor in a single company--a simple contract may be all that is needed. At the other end of the spectrum, most investors in private equity firms are what's known as an 'accredited' investor. To qualify, an individual must have either: (1) a net worth of $1 million (not including the value of a primary residence), or (2) have made at least $200,000 in each of the prior two years (or have a joint income with a spouse of $300,000), and expect to make at least that much in the next year.
(A firm may have up to 35 unaccredited investors as limited partners.) Institutional investors must either be financially savvy, such as a bank, insurance company, Investment Company; or have investable assets of $5 million. However, funds of hedge funds, which pool the money of many investors to buy into private equity firms, can sometimes have lower minimums, though those minimums are still dramatically higher than those of a typical mutual fund.
Why Do Investors Put Money Into Private Equity?
Its Greater Investing Flexibility Provides Additional Diversification
Private-equity firms argue that because they have more latitude in their investment strategies and decisions, they can deliver returns that are both higher and that are more independent of the rest of the market than other investments. As an alternative asset class, private equity represents yet another way to diversify a portfolio. Returns are often based less on what is happening in the stock market than on the fortunes of an individual company or the skills of a private equity firm's management.
It Can Offer Opportunities to Be Part of a Business Success Story
With early-stage and venture capital investing, you may be able to have an impact on the growth of an emerging company. Many investors find psychic reward in helping to develop and nurture a young company.
It Can Be Highly Profitable
Though the risks are high, a successful private equity investment can be lucrative. Many of the most skilled managers are drawn to the field because of the opportunities for participating in mergers, acquisitions, and highly profitable deals. And a successful investment in an early-stage company can provide dramatic returns.
For Some, Limited Access Lends an Image of Status
There is a certain perceived status to private equity investing. Because investing minimums are so high and access to the best private equity firms is extremely limited, some investors are drawn to private equity as they would be to an exclusive private club.
What Are The Disadvantages of Private Equity Investments?
You May Not Qualify to Make a Private Equity Investment
Anyone who is willing to lend money to an entrepreneur can be an angel investor. However, private equity firms are limited in the number of investors they can accept, and those investors must meet standards set by the SEC.
Freedom from Regulation Is a Double-Edged Sword
Under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, private equity firms that have more than $150 million in total assets under management are required to register with the SEC; others are not. Also, the investing freedom that private equity admirers consider a strength can also bring much higher risk. Because there are few restrictions on how a private equity firm must invest, one large disastrous investment has the potential to bring down the entire firm.
It Can Be Difficult to Determine How Your Returns Are Achieved
Private equity firms have traditionally been guarded in divulging their strategies, which they consider proprietary information. As a limited partner, you rely to a great extent on the general partner's reputation for skill and integrity.
The Investment Required Can Be Sizable
Even if you qualify to invest in private equity, the size of the investment required could have a substantial impact on your overall portfolio's asset allocation, and consequently the overall level of risk you face.
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Limited Liquidity Can Be a Problem
Private equity by its nature means that there is no established public market for your shares if you should want to get out.
Private Equity Is a Long-Term Investment
For our ExxonMobil clients who are considering investing in private equity, we'd like to remind you that with a private equity investment, you should assume your money will be tied up for a long time. You may not see any return for several years if you see any return at all. In fact, private equity firms may require a signed agreement that states how long you agree to keep your money invested.
You May or May Not Have Any Control Over How Your Money Is Used.
As an angel or venture capital investor, you may be able to have an active say in the business in which your money is invested. However, these ExxonMobil employees should keep in mind that as a limited partner of a large private equity firm, your role is likely to be very limited.
Investing Costs May Be Steep
The general partner of a limited partnership will charge a percentage of your investments as a management fee, which can often be 1.5-2.5 percent. In addition, the general partner will take a percentage of whatever profits the partnership realizes, which can be as high as 20-30 percent.
The Risks and Uncertainty Are As High As the Potential Rewards
By their very nature, early-stage, venture capital and distressed-debt investing are high-risk. Typically, you're investing in a business that has less of a track record, whose products may be untested in the marketplace, and whose management and business plan may or may not be sound. For every success story of investors who had an early stake in Microsoft, there are investors who lost their entire stake in a small company that went bankrupt or never got off the ground.
Tax Considerations with Limited Partnerships
We'd like to remind our ExxonMobil clients that, as mentioned above, partnership losses can only be deducted if you have passive gains from another investment to match against them. Limited partners (i.e. passive investors) can use losses from passive investments only to offset passive income.
Example(s): Assume Hal invests $20,000 in a newly organized LP. This is Hal's only passive investment. At the end of the year, the LP suffers an operating loss, $2,000 of which flows through to Hal as a limited partner. Because Hal does not possess passive income from another source, he cannot utilize the loss on his federal tax return this year. Nevertheless, Hal may carry forward the unused loss to offset passive income in future years.
A passive activity involves the conduct of any trade or business in which the investor does not materially participate. You materially participate in an activity only if you're involved in the activity's operations or management on a regular, continuous, and substantial basis. Typically, limited partners do not materially participate in the LP; hence, their partnership income and losses are considered passive.
Tip: Portfolio investment income (e.g., interest and dividends) from stocks, bonds, and the like is not considered passive income. Therefore, income from these sources cannot be used to offset LP losses.
The at-risk rules may also apply to LPs. The at-risk rules apply to any activity carried on for the production of income or carried on as a trade or business. Losses are allowed only to the extent of the investor's actual financial risk from the activity. Therefore, it's important that these ExxonMobil employees note that the amount of losses that exceed your at-risk amount are not deductible. Typically, your amount at risk is identical to your adjusted basis in the business. Amounts at-risk consist of a number of items, including your cash investment in the limited partnership and any amounts borrowed for use in the activity for which you are personally liable (such as a recourse loan).
Tax benefits flow through to individual partners. From the information provided on Schedule K-1, each limited partner reports on an individual income tax return his or her distributive share of the partnership's taxable income or loss, and separately stated items of partnership income, gain, loss, deductions, and credits. However, a limited partner's passive losses can be used only to offset passive income from other sources; they cannot be used to offset earned income or investment income. Nevertheless, unused losses may be carried forward to offset a gain from the disposition of the passive investment or may be used against a gain from other passive investments.
A limited partner's basis consists of the amount of money (and the adjusted basis of any property) he or she contributed to the partnership. This basis is increased by any further contributions and by his or her distributive share of income and (if applicable) the excess of the deductions for depletion over the basis of the property subject to depletion. The basis is decreased (but not below zero) by current distributions to him or her by the partnership and by his or her distributive share of losses and certain nondeductible expenditures. If applicable, the basis is also decreased by the amount of his or her deduction for depletion with respect to oil and gas wells. Net losses are considered tax preference items for purposes of the alternative minimum tax (AMT). Also, most MLPs are now taxable as corporations.
How does the ExxonMobil Savings Plan compare against typical retirement savings plans, and what unique features does it offer that can benefit employees approaching retirement? Additionally, can you elaborate on the necessary steps ExxonMobil employees should take within the savings plan to ensure maximum contributions and employer match during their service years?
ExxonMobil Savings Plan: ExxonMobil's Savings Plan offers flexibility with pre-tax, after-tax, and Roth contributions, and features a 7% company match for the first 6% of employee contributions, a unique benefit compared to typical plans. Employees should contribute the maximum percentage to receive the full match and regularly review their investment allocations through the Voya platform(ExxonMobil_2024_ExxonMo…).
What are the eligibility criteria for employees to participate in the ExxonMobil Pension Plan, and how is the retirement benefit calculated? As employees consider their long-term savings strategy, how does the option of a lump-sum distribution versus an annuity influence their financial planning at ExxonMobil?
ExxonMobil Pension Plan: Employees are automatically enrolled and eligible for benefits after five years of service, with full retirement benefits offered at 55 with 15 years of service. The pension is calculated based on 1.6% of final average pay multiplied by years of service, minus a social security offset. Lump-sum and annuity options affect long-term financial planning, with lump sums offering immediate flexibility while annuities provide a steady income(ExxonMobil_2024_ExxonMo…).
In what ways does the ExxonMobil Employee Assistance Program (EAP) support employees during personal or family crises, and what confidentiality measures are in place to protect their privacy? Additionally, how can ExxonMobil employees access these services, and what are the key resources available through this program?
Employee Assistance Program (EAP): ExxonMobil's EAP provides confidential counseling services for personal and family issues like anxiety, addiction, and family conflict. Services are accessible by phone, video chat, or text, with privacy strictly protected. Employees can contact ComPsych for guidance and support through the GuidanceNow app or website(ExxonMobil_2024_ExxonMo…).
With the introduction of Flexible Spending Accounts (FSAs) at ExxonMobil, how do these accounts help employees manage their health care and dependent care expenses more effectively? What guidelines should employees follow to ensure they maximize their tax advantages while complying with IRS regulations during the enrollment process?
Flexible Spending Accounts (FSAs): FSAs at ExxonMobil allow employees to reduce taxable income by contributing pre-tax dollars to healthcare or dependent care expenses. Employees should estimate their expenses carefully during the enrollment period and comply with IRS rules, ensuring they submit claims by April 15th of the following year(ExxonMobil_2024_ExxonMo…).
How does ExxonMobil define "work-life balance," and what specific benefits and programs are in place to support this philosophy for employees? Can you discuss how employees can utilize these options, such as flexible schedules and leave of absence policies, without negatively impacting their career progression within the company?
Work-Life Balance: ExxonMobil promotes work-life balance with programs like “Flex Your Day,” allowing flexibility in work hours, and up to 20 days of back-up dependent care. Employees are encouraged to use these options strategically to maintain career progression while balancing personal obligations(ExxonMobil_2024_ExxonMo…).
In light of the various medical plan options offered at ExxonMobil, how should employees approach selecting the right plan to best meet their healthcare needs? What factors should they consider, including family health history and financial implications, when making their decisions?
Medical Plan Selection: ExxonMobil offers Aetna POS II and network-only options, allowing employees to choose between plans based on cost, coverage, and provider access. Employees should assess their family's healthcare needs, financial situation, and preferred providers when selecting the most appropriate plan(ExxonMobil_2024_ExxonMo…).
For ExxonMobil employees nearing retirement, what resources are available to help them understand the nuances of health benefits coordination through Medicare and their ExxonMobil coverage? How can they best navigate this transition, and what checkpoints should they be aware of to ensure they remain compliant with company policies during retirement?
Retirement Health Benefits and Medicare: ExxonMobil offers resources to help employees coordinate health benefits with Medicare upon retirement. Employees nearing retirement should explore their options through the Your Total Rewards portal and ensure compliance with company policies during the transition(ExxonMobil_2024_ExxonMo…).
What financial education resources does ExxonMobil provide to employees to promote informed decision-making about their retirement savings and benefits? Can you detail how programs like the Financial Fitness Program enable employees to strategically manage their finances and plan for retirement?
Financial Education Resources: ExxonMobil's Financial Fitness Program, provided in collaboration with Ernst & Young, helps employees manage their finances with resources such as EY Navigate and personalized financial planning. This program supports informed decision-making about retirement and savings strategies(ExxonMobil_2024_ExxonMo…).
As part of the benefits provided by ExxonMobil, how does the company facilitate employee participation in volunteer programs and charitable activities through the ExxonMobil Foundation? How can employees engage with these initiatives while also balancing their work commitments?
Volunteer Programs: Through the ExxonMobil Foundation, employees can engage in charitable activities via the Volunteer Involvement Program (VIP), which offers grants to nonprofits based on time spent volunteering. Participation in these programs is flexible, enabling employees to balance work commitments with volunteer efforts(ExxonMobil_2024_ExxonMo…).
How can ExxonMobil employees get in touch with benefits representatives to address specific questions about their retirement and savings plans? What are the recommended channels and best times to reach out for assistance to ensure they receive timely and relevant information about their options?
Contacting Benefits Representatives: Employees can reach out to the ExxonMobil Benefits Service Center at 833-776-9966 during business hours (8 a.m. to 4 p.m. CST) for assistance with retirement and savings plan questions. The Your Total Rewards portal also offers 24/7 access for reviewing and managing benefits(ExxonMobil_2024_ExxonMo…).