Flexible Spending Accounts

Summary Plan DescriptionEffective January 1, 2018

Introduction

Many of us have dependent care and healthcare expenses that aren’t fully covered under a benefit plan or by any other source. This plan is designed to help you by allowing the use of before-tax dollars to pay these expenses. The following flexible spending accounts (FSAs) are available:

• Dependent care FSA — for dependent care expenses, such as charges for child day care or elder care while you’re at work

• Healthcare FSA — for out-of-pocket medical, prescription drug, dental and vision expenses (not available to HSA, HSA Plus or Kaiser Plus plan members)

• Health savings account (HSA)-compatible FSA — for out-of-pocket dental and vision expenses (only available to HSA, HSA Plus and Kaiser Plus plan members)

We hope that the information provided in this summary plan description (SPD) will answer most of the questions you have regarding your benefits. When you need assistance or have specific questions, contact the resources listed on the back cover of this SPD.

Provisions of the FSAs are summarized in this SPD. This description doesn’t state all plan terms and conditions. The information provided here doesn’t cover every situation and isn’t intended to replace the plan documents — or to change their meaning. In all cases, the plan documents — and not this summary — will govern benefits paid under the plan.

Refer to the Glossary for definitions of terms used in this SPD that may be unfamiliar to you or that have unique meanings under the plan.

The benefits described in this SPD are available to eligible employees of McKesson Corporation. While the FSA plan is expected to continue, McKesson Corporation reserves the right to amend, suspend, or terminate the plan at any time. The plan’s terms can’t be modified by written or oral statements to you from human resources representatives or other personnel. Where conflict exists, the terms as set forth in the plan document govern.

The benefits described in this SPD apply to coverage in effect as of January 1, 2018.

HR Support Center855.GO.MCKHR (855.466.2547)Your source for benefits informationand gateway to an advocate.Press 1 for the McKesson Benefits Center for Health, Vitality and Pension questions. Benefit experts are available: 7 a.m. - 6 p.m. Central time, M-F.Oprime 1 para asistencia en español através del McKesson Benefits Center.

2

What’s Inside

FSA Highlights4 FSA Overview

6 FSA Options at a Glance

7 Important FSA Rules and Restrictions

8 Effect on Other Company Benefits

Dependent Care FSA9 Contributions

10 Eligible Expenses

11 Exclusions

12 Effect on Child and Dependent Care Tax Credit

13 Tax Filing Information

Healthcare FSA and HSA-Compatible FSA14 Healthcare FSA and HSA-Compatible FSA Options

14 Contributions

15 Eligible Expenses

18 Exclusions

19 WageWorks Healthcare Card

Circumstances That May Affect Benefits21 Right of Recovery

21 Nondiscrimination Testing

21 Personal Tax Implications

21 Right to Modify Elections

This document provides only a summary of coverage. The official plan document — and not this summary — govern benefits paid under the plan.

Claim Information 22 Claims Administrators

22 Filing Claims

23 Processing Claims

24 If Your Claim Is Denied

25 Filing an Appeal

Appendix 26 Appendix A: Eligibility and Cost

27 Appendix B: Enrollment and Effective Date of Coverage

29 Appendix C: Termination of Coverage

30 Appendix D: Continuation Coverage (COBRA)

32 Appendix E: Administrative Information

33 Appendix F: Your Rights Under the Plan

Glossary35 Glossary

3

FSA Highlights

FSA Overview

Flexible spending accounts (FSAs) provide an opportunity to get more for your dependent care and healthcare dollars. Every FSA dollar you spend saves you money — not because the services cost less — but because you use dollars that haven’t been taxed. We offer the following accounts:

• Healthcare FSA* — for out-of-pocket medical, prescription drug, dental and vision expenses (not available to HSA, HSA Plus or Kaiser Plus plan members).

• Health savings account (HSA)-compatible FSA* — for out-of-pocket dental and vision expenses (only available to HSA, HSA Plus and Kaiser Plus plan members).

• Dependent care FSA — for dependent care expenses, such as charges for child day care or elder care while you’re at work.

* You can’t be enrolled in both the healthcare FSA and HSA-compatible FSA at the same time.

See p. 14 to learn the differences between the healthcare FSA and the HSA-compatible FSA.

When you’re first eligible, choose the amount (if any) you want to contribute to FSAs for the remainder of the current calendar year. Then, each year during the annual enrollment period, choose the amount (if any) you want to contribute to FSAs for the following year. Your participation doesn’t automatically continue — you need to re-enroll during the annual enrollment period if you wish to participate in the following year.

It’s important that you carefully estimate the amount of eligible expenses you may have and set aside only as much as you expect to spend during each calendar year. You can’t transfer money from one account to another and, by law, any unused account balances are forfeited.

Managing Your FSAWhen you enroll, account(s) are established in your name for bookkeeping purposes. (Interest doesn’t accrue on these accounts.) You can manage your accounts online or over the phone. First, register online at www.wageworks.com. After you enter your employee/contact information and create a username and password, you can access your information at any time. In addition to reviewing your most recent FSA activity, you can:

• Update your account preferences and personal information.

• View your transaction and account history.

• Schedule payments to healthcare and dependent care providers.

• See the complete list of eligible expenses for your FSA.

• Manage your account while on the go via the WageWorks mobile website.

• Order additional WageWorks® Healthcare Cards for your family (see p. 19).

• Download the EZ Receipts® app to file claims and take care of card payment paperwork from your mobile device.

You can elect to receive account statements via email by selecting that option on the WageWorks website. If you prefer hard copy statements, you can view/print your account statements at any time from your online WageWorks account.

Help with Your FSA(s)WageWorks www.wageworks.com877.924.3967WageWorks administers your FSA(s) and provides helpful tools on their website.

UPoint digital.alight.com/mckessonUPoint provides additional FSA tools.

4

FSA Highlights

In exchange for the tax advantages provided with flexible spending accounts, the Internal Revenue Code imposes restrictions (see p. 7).

FSA SavingsFederal regulations allow FSA contributions to be deducted from your pay on a before-tax basis. This means that you don’t pay federal or state (in most states) income taxes or employment taxes (such as FICA) on your contributions.

Your actual savings depend on your personal tax situation. The example below highlights how your take-home pay could change if you participate in the plan. Talk with a tax advisor to find out how this plan will affect your specific tax situation.

Healthcare FSA* HSA-Compatible FSA* Dependent Care FSA

Benefit eligible employees not enrolled in the HSA,

HSA Plus or Kaiser Plus plan

HSA, HSA Plus and Kaiser Plus plan members only

All benefit eligible employees

Maximum Contribution $2,600 $2,600 $5,000If you contribute this much: $1,200 $1,200 $2,500

And your tax rate is: 25% 25% 25%

Your estimated annual savings are (your actual savings will vary):

$300 $300 $625

* You can’t be enrolled in both the healthcare FSA and HSA-compatible FSA at the same time.

If You Have Any High-Deductible Health Plan CoverageIf you’re covered under your spouse/domestic partner’s high-deductible health plan and wish to preserve the ability to make health savings account contributions, don’t contribute to a McKesson healthcare FSA. A healthcare FSA will disqualify you and your spouse/domestic partner from making health savings account contributions.

No Guarantee of Tax ConsequencesThere is no commitment or guarantee that any amounts paid to you or on your behalf under the plan will be excludable from your gross income for federal, state or local income tax purposes, or that any other federal, state or local tax treatment will apply or be available to you.

For example, if the IRS audits your individual income tax return, you may be required to show that expenses reimbursed through the plan meet the applicable requirements. Reimbursement doesn’t guarantee that benefits payable under the plan won’t be declared taxable by the IRS at some time in the future. If benefits are subject to taxation, including any benefits paid in error by the claims administrator, you’ll be responsible for paying those taxes and any penalties.

5

FSA Options at a Glance

Healthcare FSA HSA-Compatible FSA Dependent Care FSA

Benefit eligible employees not enrolled in the HSA, HSA Plus

or Kaiser Plus plan

HSA, HSA Plus and Kaiser Plus plan members only All benefit eligible employees

Contribution Amounts

$100 to $2,600$100 to $5,000* ($2,500 if you and your spouse file separate tax returns)

Eligible Expenses Your and your eligible dependents’ healthcare expenses that you pay out of pocket and aren’t reimbursed by any other source (such as insurance). For example, you can use FSA dollars for medical, dental and vision copays, coinsurance and other eligible out-of-pocket expenses (including deductible amounts).

Your and your eligible dependents’ dental and vision expenses that you pay out of pocket and aren’t reimbursed by any other source (such as insurance). For example, you can use FSA dollars for dental and vision copays, coinsurance and other vision and dental out-of-pocket expenses (including deductible amounts).

Out-of-pocket costs for licensed nurseries or daycare centers, babysitting services, day camp and after-school programs, and caregivers for an elderly or incapacitated dependent. The expenses must be necessary to allow you — and, if applicable, your spouse — to work, look for work or go to school full time.

Eligible Dependents

• Your spouse.

• All dependents you claim on your tax return.

• Any person you could have claimed as a dependent on your return except that (1) the person filed a joint return, (2) the person had gross income of $4,050 or more, or (3) you, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2017 return.

• Your child under age 27 at the end of your tax year. For the most up-to-date information about eligible dependents, please refer to IRS Publication 969.

Dependents that you can claim on your federal tax return and who are either:

• Your spouse, if he/she is physically or mentally unable to care for himself/herself and lives with you for more than half the year.

• Your qualifying child** who was under age 13 when the care was provided.

• Your qualifying child** who is age 13 or older or another qualifying relative** who is physically or mentally unable to care for himself/herself.

Special rules apply for children if you’re divorced or legally separated, as summarized in the qualifying child definition on pp. 37-38.

Access to Contributions

As soon as participation begins, you can be reimbursed in full for eligible expenses up to your annual contribution amount minus any reimbursements you already received regardless of the current balance in your account (see p.14).

You can be reimbursed for eligible expenses only up to the amount available in your account at the time of the claim (see p. 9). The remainder will be reimbursed after you make additional contributions.

* You may not contribute more than your earned income or that of your spouse, whichever is less. For example, if you earn $25,000 per year and your spouse earns $4,000 per year, your maximum contribution is limited to $4,000 per year. In addition, your contribution amount may be reduced if the plan fails one of several IRS benefit limitation tests. You’ll be advised if this occurs.

** Refer to the Glossary for definitions of “qualifying child” and “qualifying relative.”

FSA Highlights

6

Important FSA Rules and Restrictions

Plan carefully before enrolling. In exchange for the tax advantages, the IRS applies rules and restrictions to these accounts. As examples:

• You must use your FSA contributions for expenses incurred during the current year. For example, amounts you contribute during one calendar year must be used for expenses incurred from January 1 to December 31 of that year. And, you must submit claims to WageWorks for those expenses no later than March 31 of the following year.

• You’ll forfeit any amounts in your FSA that aren’t applied to pay expenses submitted by the March 31 deadline.

An expense is considered incurred on the date the service is provided or the supply is purchased, regardless of when you actually pay for that service or supply.

• If you enroll in an FSA midyear (for example, if you’re a newly hired employee), your contribution amount applies only to the period remaining in that year — you can’t file claims for expenses incurred before your participation in the FSA becomes effective.

• You can enroll in an FSA or update your FSA contribution amount after your enrollment deadline (new hire enrollment deadline or annual enrollment period deadline) only if you:

– Experience a qualified status change — such as marriage or adoption — during the first ten months of the year (January through October).

– Enroll/update your contribution amount within 31 days of that change.

If your change allows you to enroll in an FSA midyear, your contribution amount applies only to the period remaining in that year — you can’t file claims for expenses incurred before your participation in the FSA becomes effective.

• You must save all of your receipts even if you use the WageWorks Healthcare Card (see pp. 19-20) for your purchases. Under IRS regulations, you may be required to submit receipts to WageWorks and/or to the IRS.

• If you take an unpaid leave of absence, your FSA participation stops. If you take a paid leave of absence, participation may continue in the healthcare FSA/HSA-compatible FSA, but will stop for the dependent care FSA. If your participation stops, you won’t be automatically re-enrolled when your leave ends. You must re-enroll within 31 days of returning to work if you wish to participate.

• If your FSA participation ends midyear because you experience a qualified status change or you leave McKesson, you can submit claims only for expenses incurred through your last day of participation. (You may be able to continue your healthcare FSA/HSA-compatible FSA participation through COBRA — see pp. 29-30).

• You can’t transfer money from one account to another. For example, money in your dependent care FSA can be used only to reimburse you for dependent care expenses. It can’t be used to reimburse you for your dependent’s healthcare expenses.

• Because your taxable income may be reduced by the amount of your elections under the plan, and because your employment tax amounts (e.g., FICA and Medicare) may be lowered as a result, your Social Security or Medicare benefits may be affected. Consult with a tax advisor to determine if and how this may affect you.

• Some dependent care FSA participants experience cash flow problems. This is because you may need to pay your provider up front and wait for claim processing to be reimbursed.

• Your participation in the dependent care FSA may disqualify you from taking advantage of the federal child and dependent care tax credit (see p. 12).

Review FSA information on UPoint. IRS rules regarding eligible expenses and dependents are very specific.

FSA Highlights

7

Tips for HRA Core Plan MembersIf you’re covered under the HRA Core plan:

• You can only enroll in the healthcare FSA.

• If you enroll in the healthcare FSA:

- You can use FSA dollars to pay eligible out-of-pocket medical, prescription drug, dental and vision expenses. These include copay, coinsurance and deductible amounts (including any amounts you pay out of pocket toward your deductible or coinsurance).

- You can’t use FSA dollars for medical and prescription drug expenses that are paid with health reimbursement account (HRA) dollars.

The healthcare FSA may be a good option if you think your medical and prescription drug expenses will cost more than the amount McKesson contributes to your health reimbursement account or if you expect to have significant dental or vision expenses.

FSA Highlights

Tips for HSA, HSA Plus and Kaiser Plus Plan MembersIf you’re covered under the HSA, HSA Plus or Kaiser Plus plan:

• You can enroll in the HSA-compatible FSA. You’re not eligible for the healthcare FSA.

• You can use HSA-compatible FSA dollars to pay only eligible out-of-pocket dental and vision expenses.

The HSA-compatible FSA may be a good option if you think your out-of-pocket dental or vision expenses will be significant.

Other Company BenefitsYour FSA contributions won’t affect any Company benefits that are based on pay, such as life insurance, disability insurance, and retirement/401(k) benefits. These benefits will continue to be based on your salary prior to any before-tax amount being deducted.

Effect on Other Company Benefits

8

Contributions

The dependent care FSA allows you to set aside before-tax dollars to pay for eligible dependent care expenses that are necessary to allow you — and, if you’re married, your spouse — to work, look for work, or go to school full time.

You choose the amount (if any) to contribute to your dependent care FSA. The minimum contribution is $100 per year ($8.33 per month). The maximum annual contribution varies depending on your personal situation as shown below. These maximum annual contributions apply whether you’re enrolled in the dependent care FSA for the entire calendar year or only for a partial year.

If You’re Your Maximum Annual Contribution Is

Single The lesser of $5,000 or your earned income.

Married and file a joint income tax return

The lesser of $5,000 or the earned income of the lower-paid spouse*.

Married and file separate income tax returns

The lesser of $2,500 or the earned income of the lower-paid spouse*.

Married and your spouse also contributes to a dependent care FSA through his/her employer

You and your spouse’s combined contribution can’t exceed the $5,000 or $2,500 maximums shown above. (Any contribution above those maximums will be treated as taxable income by the IRS.) Note that you can’t claim the same expenses under both FSAs.

Married and your spouse is either a full-time student at least five months a year, or is physically or mentally incapable of self-care

• $250 per month if you have one eligible dependent

• $500 per month if you have two or more eligible dependents

Contribution amounts are subject to change by the IRS. Contact WageWorks for current information.

* If your spouse is physically or mentally incapable of self-care or is a full-time student in any given month, the IRS considers that he/she earns income for purposes of determining your maximum annual contribution. In this event, your spouse is considered to have earned income of not less than $250 per month if you have one eligible dependent or $500 per month if you have two or more eligible dependents. These amounts are subject to change by the IRS.

Your contribution amount may be reduced if the plan fails any IRS benefit limitation tests. You’ll be advised if this occurs.

Review the rules and restrictions on p. 7 as you consider how much (if any) to contribute to a dependent care FSA.

Access to Your ContributionsYou can spend dependent care FSA dollars only after your contributions have been credited to your account. Like a regular checking account, you can only spend dollars that you have in your account. If you don’t have enough money in your account to cover an expense you submitted for reimbursement, the unpaid balance will be pended and you’ll be reimbursed after you make additional contributions. For example, if your account balance is $50 and you submit a claim for $75, you’ll be reimbursed for $50 and the remainder will be paid after further contributions are deducted from your paychecks.

The minimum reimbursement amount is $5. If your claim is for less than $5, WageWorks will pend that reimbursement until you submit additional claims.

Dependent Care FSA

9

Eligible Expenses

Dependent care expenses must meet the regulations of Internal Revenue Code (IRC) §21 and §129. Generally, expenses are eligible only if the care meets all of the following requirements.

• The care must be for an eligible dependent and the caregiver’s primary responsibility must be the dependent’s well-being and protection.

• The care must be necessary to allow you to work or look for work. If you’re married, both you and your spouse must work or be looking for work. However, this work requirement doesn’t apply to your spouse if he/she is a full-time student for at least five months during the year or if your spouse is mentally or physically disabled and unable to care for the dependent.

• The care must be provided while you’re participating in the plan. For example, if your participation in the plan begins on January 1, care provided before that date won’t be covered even if you pay the bill for the care on or after January 1. Similarly, care provided after the date your participation in the plan ends isn’t covered even if you pay for that care in advance.

• The care must be provided on days the dependent is an eligible dependent. For example, assume you’re participating in the plan as of January 1 and have a daughter that will be an eligible child until her 13th birthday on May 1. Only the dependent care services provided for your daughter from January 1 through April 30 would be eligible.

• The care must be given by an eligible provider. The provider:

– May not be your spouse, your child’s other parent, your child under the age of 19 (regardless of whether or not he/she is your dependent for tax purposes), or your dependent for tax purposes.

– Must comply with any state or local laws (including being licensed, if required).

– Must give you his/her Social Security Number or tax identification number. You’ll need this information to file a claim for reimbursement and for any IRS audit purposes.

Eligible dependent care expenses are defined by the IRS and current tax laws and rulings. For more information, refer to IRS Publication 503, “Child and Dependent Care Expenses” (available at www.irs.gov/publications/p503) or consult your tax advisor.

IRS Publication 503 deals with the federal child and dependent care tax credit, not dependent care flexible spending accounts. Please note that not all portions of the publication apply to the dependent care FSA. Contact WageWorks or your tax advisor to determine whether an expense is eligible for reimbursement.

The claims administrator has the final authority for determining if an expense is eligible for reimbursement. Past claim payments by the claims administrator are no guarantee that an expense will continue to be eligible. If, for any reason, a claim has been paid in error, the plan may recover the overpayment from any future payments. In the event the IRS audits the plan, the claims administrator will act in accordance with any audit determination made by the IRS.

Dependent Care FSA

10

Eligible Expenses — A Partial ListThe following is a partial list of eligible expenses. (You can find a complete listing by logging on to your WageWorks account at www.wageworks.com.) Each expense must also meet the eligible expense requirements summarized above.

• Before- and after-school day care programs.

• Care provided outside your home for a dependent child under age 13 or another eligible person who regularly spends at least eight hours each day in your home.

• Day camp, even if the camp specializes in a particular activity, such as computers or soccer. This may include summer day camp. (Only the portion of the cost attributable to day care is eligible. Any tuition or other fees unrelated to day care are excluded.)

• Day care provided by a dependent care center that complies with all state and local laws.

• Education expenses for a child in nursery school, preschool or similar programs for children below the level of kindergarten.

• In-home care (including Social Security taxes you pay on behalf of your provider). This includes au pairs, babysitters, nurses, housekeepers or companions in your home if their service is primarily for the care and well-being of the eligible dependent.

• Late pick-up fees if the child is picked up late because you’re working late.

• Nonrefundable fees to secure your dependent’s place in a day care center. These fees are eligible only after expenses for dependent care services are incurred.

• Private school day care (but not tuition and other fees unrelated to day care if the child is in kindergarten or above). You may count the portion of the cost for sending your child to school that is for your child’s care if it can be separated from the expenses of education. For example, you may count the cost of an after school care program even though the school tuition doesn’t qualify.

• Other expenses that would be considered eligible for a child and dependent care tax credit for federal income tax purposes. For a complete listing of these expenses, refer to IRS Publication 503, “Child and Dependent Care Expenses” (available at www.irs.gov/publications/p503).

You’ll be required to submit documentation that shows an expense is eligible if requested by the claims administrator. If you don’t provide the requested documentation, your expense will be considered ineligible under the plan and you’ll need to pay applicable taxes on the amount.

Exclusions

You won’t be reimbursed for any expenses that don’t meet the criteria for eligible expenses as summarized in this summary plan description or don’t qualify for the federal child and dependent care tax credit (see p. 12). Examples of ineligible expenses include, but aren’t limited to:

• Expenses claimed under the child or dependent care tax credit on an individual’s tax return.

• Expenses for which you submit claims after the claim filing deadline.

• Expenses incurred:

– After the applicable plan year deadline (for example, contributions made during one plan year must be used to reimburse expenses incurred from January 1 - December 31 of that year).

– Before your participation in the plan begins or after your participation ends.

– During any period that you can’t claim your dependent as an exemption on your federal income tax return.

– While away from work because of vacation, illness or leave of absence.

An expense is considered incurred on the date the service is provided, regardless of when you actually pay for that service.

• Expenses incurred for services provided outside your home, unless they’re for the care of your dependent child under age 13, or another eligible dependent who regularly spends at least eight hours each day in your home.

• Expenses incurred from a provider for whom you don’t have a Social Security Number or tax identification number.

• Expenses that are reimbursed by another plan under which you’re covered, or if married, your spouse is covered.

• Expenses that aren’t work-related (i.e., they aren’t necessary to allow you — and, if you’re married, your spouse — to work, look for work or go to school full time).

Dependent Care FSA

11

Exclusions (continued)

• Expenses prepaid in an earlier year. If you pay for services before they’re provided, you can claim the prepaid expenses only in the year the care is received.

• Amounts paid to an ineligible provider, such as your child who is age 18 or younger or who can otherwise be claimed as a dependent for tax purposes.

• Babysitting costs that aren’t considered work-related expenses. For example, the cost of a babysitter while you and your spouse go out to eat.

• Convalescent home expenses.

• Day care expenses incurred during hours when you or your spouse aren’t working.

• Long-term care expenses.

• Expenses that aren’t for care, including:

– Child support payments.

– Education expenses, such as those to attend kindergarten or a higher grade.

– Elective field trip expenses.

– Food, clothing, education and entertainment expenses. However, you may include small amounts paid for these items if they’re incidental to and can’t be separated from the cost of caring for eligible dependents.

– Healthcare expenses incurred by your dependents (those expenses may be reimbursable through a healthcare FSA/HSA-compatible FSA).

– Household service expenses for a chauffeur, bartender or gardener.

– Lesson (e.g., dance, music, etc.) and tutoring expenses.

– Overnight camp expenses (however, the portion of the expense related to day care may be eligible if it can be broken out from the total camp fee).

– Sports lesson expenses (individual fees charged for sports lessons aren’t eligible if they can be separated from the cost of the care).

– Transportation expenses. The cost of getting a dependent from your home to the care location and back, or vice versa, isn’t considered a work-related expense. This includes the costs of bus, subway, taxi or private car. Also, if you pay the transportation cost for the care provider to come to your home, you can’t count this cost as a work-related expense.

Effect on Child and Dependent Care Tax Credit

Another option for reducing your taxes is to claim the child and dependent care tax credit on your tax return instead of using the dependent care FSA. The amount of this tax credit is determined by applying a percentage (20-35% based on your adjusted gross household income) to your total work-related dependent care costs.

The maximum amount of eligible expenses that you can apply toward the credit is $3,000 a year if you have one eligible dependent and $6,000 if you have two or more eligible dependents. For example, if you have one dependent and are eligible for the highest percentage, your annual tax savings under the credit can be up to $1,050 (35% x $3,000). If you have two or more eligible dependents, your annual tax savings can be up to $2,100 ($35% x $6,000). Individual states may also have similar tax credits.

Every dollar that you put into your dependent care FSA reduces by one dollar the expenses you may claim for the tax credit. For example, if you have one dependent and contribute $3,000 or more to the dependent care FSA, you can’t also claim the tax credit. If you have two or more dependents and contribute $5,000 to the dependent care FSA, you may claim a partial tax credit of up to $1,000 ($6,000 - $5,000).

You can’t use the dependent care FSA to reimburse yourself for any expense that you claim as a tax credit on your income tax return.

In general, if you’re married, file a joint income tax return, and your household income is $25,000 or more before deductions, the dependent care FSA may save you more in taxes than the child and dependent care tax credit. Since each personal tax situation varies, consult a tax advisor to determine which option is best for you.

You can find information on the Child and Dependent Care Tax Credit in Publication 503, “Child and Dependent Care Expenses” available at www.irs.gov/publications/p503.

Dependent Care FSA

12

Tax Filing Information

You must file Form 2441, “Child and Dependent Care Expenses,” with your federal tax return to claim an exclusion from income for your dependent care FSA contributions that the Company reports in Box 10 of your Form W-2. Form 2441 also requires that you provide the name, address and Social Security Number or taxpayer identification number for the persons or organizations that provided care for your dependent. If your dependent care provider is considered an “exempt” organization by the IRS, you must report the name and address of the exempt organization and indicate “tax exempt” in the space provided for the taxpayer identification number.

Your dependent care FSA contributions will be taxable if you fail to report correct information and can’t provide proof requested by the IRS to show that you took all reasonable steps — referred to as “due diligence” — to obtain that information. Examples of showing due diligence are:

• Keeping a copy of the provider’s completed Form W-10, “Dependent Care Provider’s Identification and Certification.”

• Keeping a copy of the provider’s Social Security card or driver’s license (in a state where the driver’s license includes the Social Security Number).

• Keeping a copy of the provider’s completed Form W-4, “Employee’s Withholding Allowance Certificate,” if he/she is your household employee.

• Keeping the required information from a copy of the provider’s recently printed letterhead or printed invoice.

Care providers can be penalized if they don’t provide this information to you or if they provide incorrect information. If the provider refuses to give you the identifying information, report whatever information you have (such as the provider’s name and address) on Form 2441 and follow the instructions on that form. Be sure to indicate that you requested the information from the care provider, but the provider didn’t give you the information.

Dependent Care FSA

13

Healthcare FSA and HSA-Compatible FSA Options

The healthcare FSA and health savings account (HSA)-compatible FSA both allow you to set aside before-tax dollars to pay for certain healthcare expenses.

• HSA-compatible FSA dollars are limited to paying for eligible dental and vision expenses.

• Healthcare FSA dollars can be used for eligible medical, prescription drug, dental and vision expenses. You’re not eligible for the healthcare FSA if you’re covered under the HSA, HSA Plus or Kaiser Plus plan.

You can’t be enrolled in both the healthcare FSA and HSA-compatible FSA at the same time.

Account DifferencesThe healthcare FSA is a general-purpose FSA that allows for payment of eligible medical, prescription drug, dental and vision expenses. This FSA isn’t available to HSA, HSA Plus or Kaiser Plus plan members because they may be eligible to contribute to a health savings account if they meet other IRS requirements. One of those requirements is that the person may not have any non-high-deductible health plan coverage, including coverage under a general-purpose healthcare FSA.

The HSA-compatible FSA is available to employees who are covered under the HSA, HSA Plus or Kaiser Plus plan. By limiting the use of FSA dollars to pay only dental and vision expenses, the HSA-compatible FSA doesn’t interfere with the participant’s eligibility to contribute to a health savings account.

If you’re covered under the HSA, HSA Plus or Kaiser Plus plan and will be contributing to both a health savings account and an HSA-compatible FSA, keep in mind that:

• FSA dollars can be used only for eligible dental and vision expenses.

• Health savings account dollars can be used for any purpose, but can only be distributed to you on a tax-free basis and without triggering a tax penalty if used to pay for eligible expenses (see pp. 15-18), long-term care services and certain types of insurance premiums.

You can find more information about health savings accounts on the WageWorks website at www.wageworks.com or by referring to IRS Publication 969, available at http://www.irs.gov/publications/p969/index.html.

Contributions

You choose the amount (if any) to contribute to your FSA, subject to the minimum and maximum contribution limits shown below.

Contribution Limits* Monthly Contribution

Annual Contribution

Minimum $8.33 $100

Maximum $216.66 $2,600

Contribution amounts are subject to change by the IRS. Contact WageWorks for current information.

* Your contribution amount may be reduced if the plan fails one of several IRS benefit limitation tests. You’ll be advised if this occurs.

If you and your spouse both work for McKesson and are eligible to participate in the healthcare FSA, both of you can enroll and both of you can contribute up to the maximum amount shown above.

Review the rules and restrictions on p. 7 as you consider how much (if any) to contribute to a healthcare FSA or HSA-compatible FSA.

Access to Your ContributionsThe amount available for reimbursement at any time is the annual contribution amount you chose for that calendar year, minus any reimbursements you already received. Unlike the dependent care FSA, the healthcare FSA and HSA-compatible FSA both provide immediate access to the full amount of your annual contribution even if the actual contributions from your paychecks to date are less than the amount of reimbursement requested.

The minimum reimbursement amount is $5. If your claim is for less than $5, WageWorks will pend that reimbursement until you submit additional claims.

Healthcare FSA and HSA-Compatible FSA

14

Eligible Expenses

The IRS determines which healthcare expenses are eligible for reimbursement. These are expenses that you could have claimed on your federal income tax return, aren’t paid by any other source, and aren’t excluded under this plan.

Generally, expenses are eligible only if the care meets all of the following requirements.

• The care must be for you or an eligible dependent.

• The care must meet the definition of “medical care” in Section 213(d) of the Internal Revenue Code.

Medical care expenses are defined under the Internal Revenue Code as the amounts you pay for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness and must not be reimbursable through insurance or any other source.

• The care must be provided while you’re participating in the plan. For example, if your participation in the plan begins on January 1, care provided before that date won’t be covered even if you pay the bill for the care on or after January 1. Similarly, care provided after the date your participation in the plan ends isn’t covered even if you pay for that care in advance.

• Care for a dependent must be provided on days that he/she is an eligible dependent.

Keep in mind that only dental and vision expenses may be eligible under the HSA-compatible FSA.

Eligible Expenses — A Partial ListThe following is a partial list of expenses that are eligible under both the healthcare FSA and HSA-compatible FSA, provided they meet other eligible expense requirements. (You can find a complete listing by logging on to your WageWorks account at www.wageworks.com.)

• Charges above a dental or vision plan’s usual, reasonable and customary limits

• Copayments, coinsurance or deductibles required for a dental or vision plan (but not premiums)

• Dental and vision care expenses that aren’t reimbursed by a dental or vision plan

• Expenses for over-the-counter (OTC) drugs used for dental and vision treatment purposes (special rules apply to OTC drugs — see p. 17 for more information)

• Expenses for prescription drugs used for dental and vision treatment purposes (refer to exclusions for prescriptions purchased outside the United States on p. 18)

• Laser eye surgery expenses

• Orthodontia expenses

• Transportation expenses if the transportation is primarily for and essential to dental or vision care

• Vision exam, eyeglass or contact lens expenses (including contact lens solutions or enzyme cleaners)

Eligible healthcare expenses are defined by Internal Revenue Code (IRC) §213(d), and other regulations and rulings. The expenses described in IRC §213(d), other regulations and rulings, and IRS Publication No. 502, “Medical and Dental Expenses,” qualify to the extent they’re consistent with other applicable sections of the IRC. For example, although IRC §213(d) includes healthcare premiums and long-term care expenses, these expenses aren’t eligible for reimbursement under Section 106 of the Code; therefore, these aren’t eligible expenses under an FSA but may be eligible expenses to a health savings account. Visit www.wageworks.com for more information on eligible expenses.

Healthcare FSA and HSA-Compatible FSA

15

Eligible Expenses (continued)

Additional Eligible Expenses for the Healthcare FSA — In addition to the items listed above, the following are examples of expenses that are eligible under the healthcare FSA as long as they also meet other eligibility requirements.

• Acupuncture expenses

• Charges for medical care that aren’t reimbursed by a medical or prescription drug plan

• Charges above a medical or prescription drug plan’s usual, reasonable and customary limits

• Chiropractic or physical therapy expenses

• Copayments, coinsurance or deductibles required for a medical or prescription drug plan (but not premiums)

• Durable medical equipment expenses

• Expenses for medical services provided by physicians, surgeons, specialists or other medical practitioners

• Expenses for over-the-counter (OTC) drugs used for medical purposes (special rules apply to OTC drugs — see p. 17 for more information)

• Expenses for prescription drugs used for medical treatment purposes (refer to exclusions for prescriptions purchased outside the United States)

• Guide dog training and care expenses

• Hearing care expenses

• Insulin expenses

• Medical equipment expenses, such as those for crutches or wheelchairs

• Mental health and substance use disorder service expenses

• Retin A expenses, when medically necessary and not for cosmetic purposes

• Smoking cessation program expenses

• Speech therapy expenses

• Transportation expenses if the transportation is primarily for and essential to medical care

• Weight loss program expenses if the program is medically necessary and prescribed by a physician for a specific ailment

You’ll be required to submit documentation that shows an expense is eligible if requested by the claims administrator. If you don’t provide the requested documentation, your expense will be considered ineligible under the plan and you’ll need to pay applicable taxes on the amount. For more information, visit www.wageworks.com.

Letter of Medical NecessitySome expenses are eligible only when they’re necessary for the purchase of services or supplies to treat a diagnosed medical condition. These types of expenses require that a letter of medical necessity form be submitted along with your request for reimbursement. This form must be completed by your physician and confirm that the service or supply is medically necessary and isn’t for general health or cosmetic purposes. The form is available at www.wageworks.com. The following are examples of services and supplies that require a letter of medical necessity:

• Allergy treatments and products

• Alternative dietary supplements

• Alternative drugs, medicines and treatment products

• Alternative healers

• Breast reconstruction surgery (following mastectomy)

• Compression or anti-embolism socks, stockings or hosiery

• Dental veneers

• Dermatology treatments and products

• Humidifiers, air filters and supplies

• Massage therapy

• Nutritional supplements

• Reconstructive surgery (following an accident or a medical procedure or condition)

• Weight loss counseling

Healthcare FSA and HSA-Compatible FSA

16

Over-the-Counter Medicines and DrugsCertain over-the-counter medicines and drugs — such as aspirin and cold/flu remedies — are eligible only if they are prescribed by a doctor before purchase. Obtaining a prescription for an over-the-counter medicine can be as simple as calling your doctor’s office and asking them to mail the prescription to you. The prescription must:

• State the name of the patient and the name of the over-the-counter medicine.

• Be dated on or before the purchase date.

• Be signed by a licensed healthcare professional.

The prescription doesn’t need to be given to your pharmacist, but must be sent with your receipt to WageWorks for verification purposes. This applies whether you make the purchase with your WageWorks Healthcare Card (see p. 19) or file a claim for reimbursement.

Following are examples of over-the-counter medicines that require a prescription.

If you’re enrolled in the HSA-compatible FSA, keep in mind that only medicines used to treat vision and dental conditions, such as toothache pain relievers, may be eligible (see p. 14).

• Acne treatments

• Allergy and sinus medicines and products

• Antacids

• Antibiotic ointments

• Aspirin or other pain relievers

• Asthma medicines or treatments

• Canker and cold sore treatments

• Chest rubs

• Cold and flu medicines

• Corn and callus removers

• Cough drops and sore throat lozenges

• Cough syrups

• Diaper rash ointments and creams

• Ear drops and wax removal

• Gastrointestinal medications

• Herbal or homeopathic medicines

• Laxatives

• Lice treatments

• Motion and nausea medicines

• Pain relievers

• Propecia (for treatment of a medical condition)

• Retin-A (for non-cosmetic purposes)

• Sleep aids

• Toothache and teething pain relievers

• Wart removal treatments

The prescription requirement doesn’t apply to insulin and it doesn’t apply to eligible non-medicine items that are available over the counter such as equipment, supplies and medical devices. Therefore, crutches, bandages, blood sugar test kits, eyeglasses, etc. can be purchased without a prescription.

Over-the-counter drugs for personal use aren’t eligible for reimbursement since they don’t provide medical care, but are merely beneficial to one’s general health and well-being. Examples include cosmetics, denture care items, toothpaste, toothbrushes, deodorants, non-medicinal shampoos or soaps, sun block, sleeping aids, weight-reduction aids and vitamins.

Healthcare FSA and HSA-Compatible FSA

17

Exclusions

You won’t be reimbursed for any expenses that don’t meet the requirements summarized in the Eligible Expenses provision, or don’t qualify for a federal tax deduction.

Following are examples of ineligible expenses. Note that the exclusions apply even if they refer to a service or procedure that a doctor has recommended.

• Cosmetic treatment (unless the treatment corrects a deformity resulting from or directly related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease). Cosmetic treatment includes, but isn’t limited to, teeth whitening, laser peels, chemical peels, hair removal, electrolysis, hair transplants and treatment for male pattern baldness

• Custodial nursing care expenses

• Dance or swim lesson expenses, if the lessons are only for the improvement of one’s general health

• Expenses claimed as tax-deductible medical care expenses on your tax return

• Expenses for drugs that are prescribed for cosmetic purposes (such as Rogaine for hair-loss treatment)

• Expenses for illegal services or supplies, including amounts paid for controlled substances in violation of federal law (such as marijuana and laetrile)

• Expenses for prescriptions or medicines from other countries. However, you can include the cost of a prescribed drug purchased and consumed in another country if the drug is legal in both the United States and the other country

• Expenses for transportation to and from work (even if the condition requires special means of transportation), travel for purely personal reasons to another city for an operation or other medical care, or travel that is merely for the general improvement of one’s health

• Expenses for trips or vacations taken for relief of a condition, change in environment, improvement of morale, or general health purposes

• Expenses you submit claims for after the claims-filing deadline

• Expenses incurred after your participation in the plan terminates

• Expenses incurred before you’re participating in the plan

An expense is considered incurred on the date the service is provided or the supply is purchased, regardless of when you actually pay for that service/supply.

• Expenses reimbursed through other sources, such as another plan under which you or your dependents are covered

• Funeral expenses

• Healthcare premiums

• Health club, gym or spa fees

• Long-term care expenses or premiums for long-term care insurance

• Marriage counseling expenses

• Tuition for educational classes

• Weight loss program expenses, if the purpose of the program is the improvement of appearance, general health or sense of well-being

If you’re participating in the HSA-compatible FSA, any expense that isn’t dental- or vision-related is excluded.

Healthcare FSA and HSA-Compatible FSA

18

WageWorks Healthcare Card

When you choose to participate in the healthcare FSA or HSA-compatible FSA, a WageWorks Healthcare Card will automatically be sent to you. It gives you instant access to your FSA dollars as you pay for many eligible expenses.

You can request an additional card for use by a family member by calling WageWorks or visiting their website.

Use your card at healthcare providers and pharmacies for eligible services, products and prescriptions. You can also use the card at general merchants and pharmacies that have an industry standard (IIAS) inventory and checkout system that can automatically verify if the item is eligible for purchase with your account. Go to www.sigis.com to review a list of qualified merchants, such as pharmacies, supermarkets and warehouse stores that accept the card.

Understand Healthcare Card Rules Here’s some important information to consider before using your card. You can find more information at www.wageworks.com.

• You must follow the instructions enclosed with your card to activate it before use.

• When you swipe your card at checkout, choose credit. (If you prefer to use debit processing, request a PIN number from WageWorks. Both the credit and debit options deduct dollars directly from your account.)

• If your health plan covers a portion of the cost, it’s important to know what amount you need to pay out of pocket. Do this by presenting your health plan member ID card first so the healthcare provider can identify your copay or coinsurance amount and ensure a claim is filed with your healthcare, dental or vision insurance plan.

• Save your receipts or digital copies. You’ll need them for tax purposes. Even when your card is accepted for payment, a detailed receipt may be requested by WageWorks or the IRS.

• If you’ve lost or can’t produce a receipt for an expense, your options may range from submitting a substitute receipt to paying back your FSA for the amount of the transaction.

• If you use your card at a healthcare provider’s office, WageWorks may ask you to submit an explanation of benefits/health statement or other documentation for verification. Failure to do so may result in your card being suspended.

• If you lose your card, call WageWorks immediately. You’ll be responsible for any charges until you report the lost card.

If Your Card Is Rejected by the Healthcare Provider or Merchant — If your card is rejected for any reason and you believe your purchases are eligible, pay your provider or merchant using an alternate method and submit a claim form for the eligible purchases.

If Your Card Has an Unauthorized Transaction — Call WageWorks immediately (but no later than 90 days from the transaction date) and provide the following information:

• Your name

• Your card number

• A description of the error or transaction and why you believe it’s an invalid transaction

• The date of the disputed transaction

• The dollar amount of the disputed transaction

WageWorks will research the disputed transaction and notify

you of their findings.

Healthcare FSA and HSA-Compatible FSA

19

Healthcare FSA and HSA-Compatible FSA

WageWorks Healthcare Card (continued)

Healthcare Cards Are Deactivated at Year EndYour WageWorks Healthcare Card is deactivated at the end of each calendar year (December 31). Although your card is reactivated if you enroll for participation for the following year, the reactivated card will access only contributions that you make during the new plan year.

The IRS requires WageWorks to verify all card transactions. WageWorks will notify you by email (or regular mail if you haven’t provided a valid email address to WageWorks) when a transaction can’t be automatically verified and let you know the steps you must take. If you don’t provide verification within 90 days of the transaction, your card will be suspended and the transaction amount will be deducted from payment of future claims. Due to the time sensitivity of card verification requests, it’s recommended that you access your account on a regular basis at www.wageworks.com to see if you have any card transactions that need verification. You can also go to the WageWorks’ Learning Center on the website to learn about card use verification and view the online web tutorials.

20

Right of Recovery

The plan has the right to recover benefits paid on your behalf that were made in error or due to a mistake in fact (including any payments made with your WageWorks Healthcare Card) for expenses that aren’t qualifying healthcare expenses. If a benefit payment exceeds the amount that should have been paid or was paid in error, the claims administrator will:

• Require that you return the overpayment upon request (the amount must be paid with after-tax dollars), or

• Offset the overpayment against proper claims and deny further reimbursement until the overpayment is repaid.

If the overpayment isn’t repaid through one of these recovery procedures, the overpayment will be included in your taxable income.

Nondiscrimination Testing

The maximum annual contribution for employees who are determined to be highly compensated employees (for purposes of nondiscrimination testing) may be modified to ensure compliance with nondiscrimination requirements or benefit limitations. Refer to the Personal Tax Implications and Right to Modify Elections provisions for additional information.

Personal Tax Implications

The Company can’t provide personal tax advice. Consult a tax advisor to determine how participation in FSAs will affect your personal situation.

If the IRS audits your individual income tax return, you may be required to show that expenses reimbursed through the plan meet the applicable requirements. Reimbursement doesn’t guarantee that benefits currently payable under the plan will continue to be eligible expenses, as determined by the IRS, in the future. If benefits are subject to taxation, including any benefits paid in error by the claims administrator, you’ll be liable for any taxes or penalties that may be imposed by the IRS.

In addition, if the FSAs are found by the IRS to discriminate in favor of highly compensated employees, those employees will be taxed on all benefits provided under the FSAs.

Right to Modify Elections

If the plan fails to satisfy the nondiscrimination testing requirements or benefit limitations imposed by the IRS, your contribution amounts may be modified (with or without your consent) to ensure compliance with the requirements or limitations.

Circumstances That May Affect Benefits

21

Claims Administrators

The claims administrator is WageWorks. WageWorks is responsible for processing benefit claims under the plan. WageWorks has sole discretionary authority to interpret the terms of the plan as well as any other information relating to claims.

The claims administrator for appeals is WageWorks. WageWorks is responsible for reviewing appeals under the plan and is the named fiduciary with respect to appeals. WageWorks has sole discretionary authority to interpret the terms of the plan as well as any other information relating to appeals. WageWorks is responsible for determining eligibility for participation in the plan.

References to the claims administrator in this section refer to WageWorks for the applicable claim or appeal.

Filing Claims

There are several ways to file an FSA claim. First, register online by visiting www.wageworks.com. After you enter your employee/contact information and create a username and password, you’ll find information on the claim filing options summarized below.

WageWorks Healthcare Card (Healthcare FSA and HSA-Compatible FSA only) — The Healthcare Card acts like a debit card to allow you to access your healthcare FSA or HSA-compatible FSA dollars to pay for eligible services and supplies on the spot. See pp. 19-20 for important information about the card before you use it.

Healthcare Cards Are Deactivated at Year End Although your card is reactivated if you enroll for participation for the following year, the reactivated card will access only contributions that you make during the new plan year.

Mobile Device — The EZ Receipts mobile app allows you to file and manage your claims by using your mobile device to enter expense information and to capture and submit your documentation. You can download the app at www.wageworks.com.

Online Payment — Online payment allows you to pay many of your eligible expenses directly from your FSA account. Log on to www.wageworks.com to enter expense information and submit documentation using the upload utility. If you pay recurring eligible expenses (for example, weekly payments to a dependent care provider or a physical therapy center), you can follow the online instructions to set up automatic payments.

Online Claim Filing — Online claim filing allows you to request reimbursement for eligible expenses you paid. Log on to www.wageworks.com to enter expense information and submit documentation using the upload utility.

Paper Claims — You can submit a paper claim by fax or mail. Simply download a claim form at www.wageworks.com and follow the instructions for submission.

The minimum reimbursement amount is $5. If your claim is for less than $5, WageWorks will pend that reimbursement until you submit additional claims.

Failure to file your claims promptly may result in forfeiture of your account balance.

Claim Information

22

Time Limits for Filing ClaimsYou must submit claims for one plan year by March 31 of the following year. For example, the contributions you make during one plan year must be used to reimburse expenses incurred from January 1 - December 31 of that year. You must file all of your claims by March 31 of the following year. No benefits will be paid if you don’t file your claims on or before the deadline, and any amounts remaining in your account for that plan year will be forfeited.

Make sure that you include the proper supporting documentation when filing your claim with WageWorks.

Claim Documentation — Dependent Care FSAYou must provide information and documents to confirm that your expense is eligible including:

• The amount, date and nature of the expense.

• The dependent’s name.

• The dependent care provider’s name, address, and Social Security Number or tax identification number.

Include bills, invoices, receipts, canceled checks or other documents that show your expense amounts, as well as any additional documentation requested by the claims administrator. Keep copies of all documentation submitted.

Claim Documentation — Healthcare FSA and HSA-Compatible FSAYou must provide information and documents to confirm that your expense is eligible including:

• The amount, date and nature of the expense.

• The name of the person, organization or entity to which the expense was or is to be paid.

• The name of the person for whom the expense was incurred and, if the person isn’t you, the relationship of the person to you.

• The amount recovered or expected to be recovered for the expense under any insurance arrangement or other plan.

Also include bills, invoices, receipts, canceled checks or other documents that show your expense amounts, as well as any additional documentation requested by the claims administrator (such as a physician’s prescription or letter of medical necessity). Keep copies of all documentation submitted.

Additional Requirements for Orthodontia Claims — If you’re submitting an initial claim for eligible orthodontia services, you must also provide:

• The contract from the orthodontist, indicating the initial fee charged and estimated insurance payment.

• Initial start date (don’t include estimated future dates of service).

• Duration of treatment.

• Proof of payment for any partial or full down payment.

Processing Claims

Time Limits for Processing ClaimsThe claims administrator will notify you of its benefit determination within 30 days of its receipt of your claim, unless circumstances require an extension. If an extension is required, you’ll be given written notice of the extension prior to the expiration of the initial 30-day period. The extension won’t exceed 15 days from the end of the initial period.

In the event that an extension is necessary because there’s insufficient information to decide your claim, your written notice of the extension will describe the additional information required. You’ll have at least 45 days from your receipt of the notice to provide the information. The period for making the benefit determination will be further extended by the period starting on the date the notification of extension is sent to you and ending on the date you respond to the request for additional information.

Claim Information

23

Processing Claims (continued)

Payment of ClaimsThe claims administrator makes claim determinations on behalf of the plan in accordance with the plan. If the claims administrator approves your claim in whole or in part, the claim will be paid accordingly.

Ineligible Payments or ReimbursementsIf you use your WageWorks Healthcare Card to pay for an ineligible expense or if you receive a reimbursement from your FSA that’s later found to be ineligible or for which you don’t have the required documentation, you’ll be required to pay that amount back for credit to your FSA. WageWorks will contact you for more information about the expense in question and provide options for resolving the issue. Your options for repayment will include:

• Having the amount deducted from your next claims payment. This is the automatic repayment option that is available if your balance will cover the amount. If your balance isn’t sufficient, you’ll need to send a check as described below to avoid facing collection procedures.

• Sending a check to WageWorks. This repayment will make the amount available for other eligible expenses. (Your check must be received no later than March 31 of the year following the year in which the ineligible expense is incurred.)

Promptly work with WageWorks to arrange repayment of an ineligible expense. Failure to do so may result in your Healthcare Card being deactivated and the withholding of the owed amount from your wages or other compensation (to the extent consistent with applicable law).

If Your Claim Is Denied

If all or part of your claim is denied, you’ll receive a written notice that identifies:

• The reason(s) for the denial, including references to any specific plan provision(s) upon which the denial was based.

• The additional materials or information needed to support your claim and why the information or materials are necessary if the claim was denied because you didn’t furnish complete information or documentation.

• The appeals procedures and the time limits that apply to them.

Additional Information for Healthcare FSA and HSA-Compatible FSA claim denials The written notice of denial will also include information on your right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended, (ERISA) after completion of the plan’s appeal process.

If your claim is denied on the basis of an internal rule, guideline, protocol or other similar criterion, the notice will:

• Either state the specific rule, guideline, protocol or other similar criterion, or include a statement that the rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination.

• Advise you that a copy of the rule, guideline, protocol or other criterion will be provided free of charge upon request.

If your claim is denied based on medical necessity or experimental treatment or a similar exclusion or limit, the notice will include an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the medical circumstances, or include a statement that the explanation will be provided free of charge upon request.

Claim Information

24

Filing an Appeal

If the claims administrator denies your request for benefits, you may appeal the denial. To begin the appeal process, you must submit a written request for appeal to the claims administrator within 180 days after you receive the claim denial notice. In your request, state why you believe your claim should be paid.

You may submit written comments, documents, records and other information relating to your claim in connection with your appeal. You may also request to receive, free of charge, reasonable access to, or copies of, all documents, records and other information relevant to your claim.

The review of your appeal will take into account all comments, documents, records and other information submitted by you that relate to your claim.

Additional Information for Healthcare FSA and HSA-Compatible FSA AppealsYour appeal will be decided by a decision maker who is different from the decision maker at the initial claim level. This also applies to any healthcare professional who is consulted at the appeal level.

In deciding an appeal that is based in whole or in part on a medical judgment, including determinations regarding whether a particular treatment, drug or other item is experimental, investigational, or not medically necessary or appropriate, the claims administrator will consult with a healthcare professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The healthcare professional consulted won’t be the individual who was consulted in connection with any denial of the claim that is the subject of the appeal (nor his/her subordinate).

Upon request, the claims administrator will provide the identification of any medical or vocational experts whose advice was obtained on behalf of the plan in connection with the denial, whether or not the advice was relied upon in making the benefit determination.

If any new or additional evidence has been considered, or rationale relied upon during a healthcare FSA or HSA-compatible FSA appeal process, it will be provided to you at no charge in sufficient time to allow you the opportunity to respond before the notice of determination on appeal is issued.

Notice of Determination on AppealWithin 60 days of receiving your written notice of appeal, the claims administrator will provide you with written notice of its decision. If your appeal is approved, the claims administrator will take whatever action is necessary to pay benefits as soon as possible. If your appeal is denied, the notice will identify:

• The reasons for the denial, including references to any specific plan provisions upon which the denial was based.

• Your entitlement to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information (other than legally or medically privileged documents) relevant to your claim for benefits.

Additional Notice Information for Healthcare FSA and HSA-Compatible FSA Appeals — The written notice of denial will also include information on your right to bring a civil action under ERISA after completion of appeal requirements under the plan.

If your appeal is denied on the basis of an internal rule, guideline, protocol or other similar criterion, the notice will:

• Either state the specific rule, guideline, protocol or other similar criterion, or include a statement that the rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination.

• Advise you that a copy of the rule, guideline, protocol or other criterion will be provided free of charge upon request.

If your appeal is denied based on a medical necessity or experimental treatment or a similar exclusion or limit, the notice will include an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the medical circumstances, or include a statement that the explanation will be provided free of charge upon request.

Claim Information

25

Appendix AEligibility and Cost

Eligibility

You become eligible for the plan on the first day of the calendar month following your date of hire if you’re a regular full-time or part-time employee who is regularly scheduled to work 30 hours or more each week and are on the Company’s U.S. payroll.

You can contribute to FSAs during a calendar year only if you become eligible to participate before November 1 of that year. For example, if you’re a newly hired employee and your hire date is November 11, you won’t be eligible to participate in the plan until the following January 1.

You’re not eligible for coverage under the plan if you’re:

• Covered by another healthcare flexible spending account plan to which McKesson contributes,

• Designated by McKesson as a seasonal or temporary employee,

• Compensated for services by a person other than McKesson,

• A leased employee, or

• Subject to a written agreement that provides that you’re not eligible to participate in the plan.

If, during any period, you haven’t been regarded as a McKesson employee and for that reason, employment taxes haven’t been withheld from your pay, then you’re not eligible to participate for that period. This applies even if you’re retroactively determined to have been a McKesson employee during all or any portion of that period.

Healthcare FSA and HSA-Compatible FSA Restriction — Any eligible employee may choose to participate in the dependent care FSA. However, note that you can’t be enrolled in both the healthcare FSA and HSA-compatible FSA at the same time. (You’re eligible for the healthcare FSA only if you’re not covered under the HSA, HSA Plus or Kaiser Plus plan.)

Cost

The plan is designed to comply with Section 125 of the Internal Revenue Code. Accordingly, the plan gives you the choice between taxable cash compensation and certain before-tax benefits. When you enroll in the plan, you choose to have the Company reduce your taxable salary by an amount you specify and deposit that amount in a flexible spending account(s) through before-tax payroll deductions throughout the calendar year. You pay the entire contribution amount — the Company doesn’t contribute to these accounts.

The McKesson Flexible Benefit Plan (the “125 Plan”) allows plan participants to make FSA contributions on a before-tax basis. This means that contributions are deducted from paychecks before federal income, state/local income (in most cases), and Social Security taxes are withheld. Actual savings depend on contribution amounts, total family income, where you live, and tax deductions andexemptions claimed.

Note that before-tax contributions may lower your earned income, which can affect your:

• Eligibility for the earned income credit.

• Social Security or Medicare benefits.

You can consult a tax advisor to determine how before-tax contributions will affect you.

Make sure you estimate your eligible expenses carefully before choosing a contribution amount. Keep in mind that FSAs are “use it or lose it” benefits. You’ll forfeit any contributions that you don’t use by December 31 of the plan year (see p. 7).

26

Appendix BEnrollment and Effective Date of Coverage

Enrollment

You may enroll for coverage only during your initial eligibility period, within 31 days following a qualified status change, or during an annual enrollment period.

It’s important that you estimate your expenses carefully and set aside only as much as you expect to spend for eligible expenses. Keep in mind that your contributions may be used only for expenses incurred from the date your participation in the plan becomes effective through December 31 of that same year. You can’t transfer money from one FSA account to another and, by law, any unused funds will be forfeited.

When you enroll, you’ll be asked to specify an annual (not monthly) contribution amount for your FSA. The annual amount is divided by your number of pay periods during the year to determine the deduction to be made from each of your paychecks.

Once you enroll in the plan, your elections for that plan year are irrevocable unless you experience a qualified status change as summarized on p. 28.

Participation in the plan doesn’t automatically continue from year to year. You must make a new election during an annual enrollment period to participate in the following plan year.

Dependents — Although you don’t enroll dependents in this plan, it’s important that you review dependent eligibility to determine which expenses will be eligible for reimbursement from contributions you make to your FSA(s). A summary of the rules for eligible dependents can be found on p. 6.

Understanding dependent eligibility is a key factor in deciding how much (if any) to contribute to an FSA.

Enrollment PeriodsYour initial eligibility period is the 31-day period that begins on the date on the Enrollment Worksheet in your Welcome Kit. For example, if you become eligible for coverage on July 1 and your Welcome Kit is mailed on July 1, you must enroll for coverage on or before July 31.

If you don’t enroll during your initial eligibility period, you must generally wait until the next annual enrollment period to enroll for coverage, unless you experience a qualified status change as summarized on p. 28. The annual enrollment period is designated by the Company each year.

Important Information for Employees Who Are Changing Their Medical Coverage to the HSA, HSA Plus or Kaiser Plus Plan During Annual Enrollment • You may elect to participate in the HSA-compatible FSA

and/or the dependent care FSA. (You will no longer be eligible for the healthcare FSA.)

• Enrollment in the HSA, HSA Plus or Kaiser Plus plan may make you eligible to contribute to a health savings account to help pay your out-of-pocket healthcare expenses.

• If you currently participate in the healthcare FSA, you must have an account balance of $0 on December 31 to start contributing to a health savings account beginning in January. Per IRS requirements, if your balance is more than $0 on December 31, you won’t be able to make health savings account contributions until April.

You can find information on health savings accounts at Total Rewards Library > HSA.

RehireIf you’re rehired and become eligible for coverage again within 30 days of your termination date, your original election will be automatically reinstated upon your rehire. If you’re rehired more than 30 days after your termination, you’ll be eligible to make a new election for the remainder of the plan year.

27

Appendix BEnrollment and Effective Date of Coverage

Enrollment (continued)

Qualified Status ChangesIn exchange for the tax advantages of making FSA contributions with before-tax dollars (as allowed under the McKesson Flexible Benefit Plan), federal law requires that your coverage elections be irrevocable. This means you can’t change your coverage elections until the next annual enrollment period unless you experience one of the following qualified status changes, which are allowed under IRS election change regulations:

• You marry, divorce or legally separate.

• You establish or terminate a domestic partnership.

• You acquire a dependent child through birth, adoption, placement for adoption, or appointment of legal guardianship.

• Your spouse or dependent dies.

• Your dependent no longer meets the plan’s eligibility requirements.

• Your spouse terminates or begins new employment.

• You or your spouse change from part-time work to full-time work (or vice versa).

• You or your spouse have a significant change in healthcare coverage.

• You’re required to provide dependent coverage as a result of a valid court decree that meets the requirements of a qualified medical child support order (QMCSO).

• You move to a location where your current medical plan coverage isn’t available.

The following may also be considered qualified status changes for purposes of your dependent care FSA:

• You change your dependent care provider.

• The cost for your qualified dependent care expenses is significantly increased or decreased during a plan year. This doesn’t apply if the cost increase is imposed by a dependent care provider who is a relative, as defined in Section 152 of the Internal Revenue Code.

There may also be other circumstances, consistent with the regulations or other guidance issued under applicable provisions of the Internal Revenue Code, that would allow a change in your elections under the plan.

Any change you make must result from and be consistent with your qualified status change. For example, if you adopt a child, you may increase your contribution amount to your dependent care FSA. However, you won’t be able to discontinue contributions. All changes are subject to and administered in accordance with federal law.

If you experience a qualified status change and choose to no longer be covered under the HSA, HSA Plus or Kaiser Plus plan, you can discontinue contributions to an HSA-compatible FSA. These funds can’t be transferred into a healthcare FSA.

To change your elections, visit UPoint within 31 calendar days of the date you experience the qualified status change. You may also call the HR Support Center to make your change. If you don’t change your coverage election within the 31-day period, you must wait until the next annual enrollment period.

Qualified Medical Child Support Order If you’re required by a qualified medical child support order (QMCSO) to provide health coverage for a child, you may change your healthcare FSA/HSA-compatible FSA contributions accordingly. Mail your change request within 31 days after the order is issued.

McKessonQualified Order TeamP.O. Box 1542Lincolnshire, IL 60069-1542Fax: 847.442.0899

You may obtain, without charge, a copy of the plan’s procedures governing QMCSOs by contacting the HR Support Center and pressing 1.

Effective Date of Coverage

If you enroll during your initial eligibility period, your coverage usually begins on the first day of the month immediately following your enrollment. If you enroll during an annual enrollment period, your coverage usually begins on the following January 1.

28

Appendix CTermination of Coverage

Termination of Coverage

Your coverage under the plan generally ends on the earliest of the following:

• The day the plan terminates or ceases to qualify under the applicable provisions of the Internal Revenue Code.

• The day you terminate employment or lose eligibility.

• The day you elect to cease participation during the plan year as the result of a qualified status change.

• Each December 31st, unless you elect during the annual enrollment period to participate for the following plan year.

• The day you become covered by a collective bargaining agreement that doesn’t provide for participation in the plan.

• The day you die.

Leaves of Absence

When you need to take a leave of absence for any reason, contact Matrix Absence Management through the Matrix eServices Mobile App, online at www.matrixabsence.com or call 855.GO.MCKHR (855.466.2547) and press 2. You can file for leave the same day you unexpectedly need to be absent from work or up 30 days before your planned absence.

Coverage may continue during a period in which you are away from work on a Company-approved leave of absence, provided you make timely payment of any required contributions.

Coverage During a Leave of AbsenceCoverage ends on the date you begin an unpaid leave of absence. During a paid leave of absence:

• Your coverage continues under the healthcare FSA or HSA-compatible FSA as long as you pay your portion of required premiums and remain eligible under the plan terms. If your leave is longer than six months, your healthcare FSA or HSA-compatible FSA coverage ends and you may be eligible for continuation coverage through COBRA.

• Your coverage ends under the dependent care FSA.

If your coverage ends during your leave, it won’t be automatically reinstated when your leave ends. If you wish to participate again in the FSAs, you must re-enroll within 31 days from the date you return to work.

Family Medical Leave Act (FMLA) Leaves — Special rules apply if you take an approved FMLA leave of absence. The Company will advise you of the applicable rules at the time you take a FMLA leave.

Coverage During Military LeavesYou and your covered dependents may elect to continuecoverage for up to 24 months. The period of coverage runsconcurrently with COBRA continuation coverage. Or, youmay choose to elect coverage under the federal program forthe military (TRICARE). For further details about how yourMilitary Leave affects your coverage, contact the HR Support Center at 855.GO.MCKHR (855.466.2547) and press 2.

Eligibility for Reimbursement After Your Coverage Terminates

Your eligibility for benefits under the plan will terminate as summarized above. However, you may continue to submit claims for reimbursement of expenses incurred prior to the date your coverage ends as summarized below.

Dependent Care FSAYou may file claims only for eligible expenses incurred before your coverage terminated, and you must submit your claims on or before March 31 of the following year. Reimbursement is limited to the balance remaining in your account on the date your coverage terminated. If you have an account balance that exceeds expenses incurred before your coverage terminated, your balance will be forfeited.

Healthcare FSA/HSA-Compatible FSA You may have the right to continue coverage under COBRA for the remainder of the plan year (see Appendix D). Under COBRA, your contributions will be on an after-tax basis.

If you don’t continue your FSA participation under COBRA, you may file claims only for eligible expenses incurred before your coverage terminated. You must submit your claims on or before March 31 of the following year. If you have an account balance that exceeds expenses incurred before your coverage terminated, your balance will be forfeited.

Your WageWorks Healthcare Card is automatically deactivated when your coverage terminates even if you continue coverage under COBRA. See p. 22 for information on other claim filing options.

Continuation Coverage (COBRA)A covered person whose healthcare FSA/HSA-compatible FSA coverage would otherwise end may be entitled to elect continuation coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), as summarized in Appendix D. Keep in mind that COBRA coverage must be elected within 60 days after you receive the notice of the continuation right from the McKesson Benefits Center. 29

Appendix DContinuation Coverage (COBRA)

Continuation Coverage

The provisions in this appendix apply only to Healthcare FSAs and HSA-Compatible FSAs.

You may be eligible for a limited period of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) after regular group coverage ends. Continuation coverage is generally the same as regular group coverage. However, contributions that aren’t deducted from employee paychecks must be made on an after-tax basis.

In no event will continuation coverage be available beyond the plan year in which your regular group coverage under the plan ends.

Qualifying Events

You may elect continuation coverage if your coverage would otherwise terminate because of any of the following qualifying events.

• Termination of your employment with the Company (for reasons other than gross misconduct) or reduction in hours that results in the loss of regular group coverage

• Divorce, legal separation or loss of dependent status

• Death of the eligible employee

Notification Requirements

The Company will notify the McKesson Benefits Center if you:

• Are terminated from employment.

• Have a reduction in hours of employment.

• Die while employed.

The McKesson Benefits Center will provide a COBRA election notice within 44 days of one of these qualifying events.

You must notify the McKesson Benefits Center within 60 days of your divorce, legal separation or loss of dependent status under the plan. The notice must include the following.

• Your name, address and Social Security Number

• Date of the qualifying event

• Type of qualifying event

Send your notice to:

McKesson Benefits CenterPO Box 7139 Rantoul, IL 61866-7139

If the McKesson Benefits Center receives timely notice, the McKesson Benefits Center will provide a COBRA election notice within 14 days of its receipt of the notice. If the McKesson Benefits Center doesn’t receive notice within 60 days of the event, the right to continuation coverage will be lost.

Electing Continuation Coverage

Continuation coverage must be elected within 60 days after you receive notice of the continuation right from the McKesson Benefits Center. If you fail to timely elect continuation coverage, the right to continuation coverage will be permanently lost. To elect continuation coverage, follow the procedures described in the COBRA election form. If you don’t elect continuation coverage, you may change your prior rejection of continuation coverage anytime within the 60-day election period by following the procedures described in the COBRA election form.

30

Appendix DContinuation Coverage (COBRA)

Paying for Continuation Coverage

You must pay for continuation coverage. Premiums can’t exceed 102% of the applicable premium for similarly situated individuals who haven’t had a qualifying event. The initial premium payment must be made within 45 days of the election of continuation coverage. All subsequent payments must be made within 30 days of the due date.

Termination of Continuation Coverage

Continuation coverage under the plan will end on the earliest of the following dates:

• The end of the plan year during which your regular group coverage terminated.

• The date coverage terminates under the plan for failure to make timely payment of the required contribution amounts. Your payments, other than the initial payment, are required to be made no later than 30 days after the payment’s due date.

• The date, after electing continuation coverage, that coverage is obtained under any other group health plan. If the new coverage contains a limitation or exclusion for your preexisting condition, continuation coverage will end on the date the limitation or exclusion ends.

• The date, after electing continuation coverage, that you become entitled to Medicare (and actually enroll in Medicare).

• The date the Company ceases to provide any group health plan to any of its employees.

• The date coverage would otherwise terminate under the plan.

If continuation coverage ends prior to the end of the plan year during which your regular group coverage terminated, the McKesson Benefits Center will provide a notice to you as soon as practicable following the McKesson Benefits Center’s determination of the early termination of continuation coverage. The notice will explain the reason for the early termination and the date of the termination.

Keep the Plan Informed of Address Changes

To protect your and your family’s rights, you must keep the McKesson Benefits Center informed of any changes in your address and the addresses of covered family members. Keep a copy, for your records, of any notices you send to the McKesson Benefits Center.

For More Information

If you have any questions concerning your rights to continuation coverage under COBRA, contact:

HR Support Center855.GO.MCKHR (855.466.2547) Press 1 for the McKesson Benefits Center for Health, Vitality and Pension questions. Benefit experts are available: 7 a.m. - 6 p.m. Central time, M-F.

McKesson Benefits CenterPO Box 7139 Rantoul, IL 61866-7139

For more information about your rights under ERISA, including continuation coverage under COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, visit the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) website at www.dol.gov/ebsa or call their toll-free number at 866.444.3272.

31

Appendix EAdministrative Information

Plan NameThe McKesson Corporation Health and Welfare Wrap Plan and Flexible Benefit Plan

Plan TypeA healthcare flexible spending account and a health savings account (HSA)-compatible flexible spending account intended to qualify under section 125(d) and 105(e) of the Internal Revenue Code and a dependent care flexible spending account intended to qualify under section 125 and 129 of the Internal Revenue Code. The plans are self-administered.

Plan Number501

Plan YearAll related financial records are kept on a plan year basis from January 1 – December 31.

Plan SponsorMcKesson CorporationOne Post StreetSan Francisco, CA 94104-5296

Plan AdministratorMcKesson Corporationc/o Sr. Vice President, Compensation and BenefitsOne Post StreetSan Francisco, CA 94104-5296415.983.8300

Plan DocumentCopies of the plan document can be requested for a nominal fee by contacting:

McKesson Corporationc/o Sr. Vice President, Compensation and BenefitsOne Post StreetSan Francisco, CA 94104-5296

Service of Legal ProcessService of legal process should be directed to:

McKesson Corporationc/o Sr. Vice President, Compensation and BenefitsOne Post StreetSan Francisco, CA 94104-5296

Service of legal process may also be made to the plan administrator.

Employer Identification Number (EIN) Plan Sponsor and Plan Administrator: 94-3207296

Claims and Appeals AdministratorWageWorksP.O. Box 14053Lexington, KY 40512 Fax: 877.353.9236877.924.3967

Benefits AdministratorMcKesson Benefits CenterPO Box 7139 Rantoul, IL 61866-7139 855.GO.MCKHR (855.466.2547)

Type of AdministrationThe plan sponsor has contracted with WageWorks to provide administrative services under the plan. WageWorks has been delegated the sole discretionary authority to determine claims/appeals and their payment.

Funding Medium/Source of ContributionsBenefits under the plan are paid by the Company directly out of its general assets in exchange for employee elections that reduce their taxable compensation. There is no special fund or trust out of which benefits are paid.

Participating EmployersA participating employer is any corporation that is a subsidiary of or affiliated with McKesson, whose employees are authorized by the Company to participate in the plan as described in this summary plan description. A complete list of participating employers and information regarding whether a particular employer participates in the plan may be obtained on written request to the plan administrator.

32

Appendix FYour Rights Under the Plan

Your Rights Under ERISA

As a participant in the healthcare FSA or the HSA-compatible FSA you’re entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974, as amended, (ERISA). ERISA provides that all plan participants shall be entitled to:

Receive Information About Your Plan and BenefitsExamine, without charge, at the plan administrator’s office and at other specified locations, such as worksites, all documents governing the plan, including insurance contracts and collective bargaining agreements, and a copy of the latest annual report (Form 5500 Series) filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The administrator may make a reasonable charge for the copies.

Receive a summary of the plan’s annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report.

Continue Group Plan CoverageContinue healthcare coverage for yourself, spouse (or domestic partner), or your dependents if there is a loss of coverage under the plan as a result of a qualifying event. You or your dependents may have to pay for such coverage. Review this summary plan description and the documents governing the plan on the rules governing your COBRA continuation coverage rights.

Reduction or elimination of exclusionary periods of coverage for preexisting conditions under your group plan, if you have creditable coverage from another plan. You should be provided a certificate of creditable coverage, free of charge, from your group plan or health insurance issuer when you lose coverage under the plan, when you become entitled to elect COBRA continuation coverage, when your COBRA continuation coverage ceases, if you request it before losing coverage, of if you request it up to 24 months after losing coverage. Without evidence of creditable coverage, you may be subject to a preexisting condition exclusion for 12 months (18 months for late enrollees) after your enrollment date in your coverage.

Prudent Actions by Plan FiduciariesIn addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

Enforce Your RightsIf your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of the plan document or the latest annual report from the plan, don’t receive them within 30 days, and you’ve exhausted the plan’s claim and appeal procedures, you may file suit in a federal court. In such case, the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the plan administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court, but only after you have exhausted the plan’s claim and appeal procedures. In addition, if you disagree with the plan’s decision or lack thereof concerning the qualified status of a medical child support order, you may file suit in federal court. If it should happen that plan fiduciaries misuse the plan’s money, or if you’re discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you’re successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

33

Appendix FYour Rights Under the Plan

Your Rights Under ERISA (continued)

Assistance with Your QuestionsIf you have any questions about your plan, contact the plan administrator. If you have any questions about this statement or about your rights under the Employee Retirement Income Security Act (ERISA), or if you need assistance in obtaining documents from the plan administrator, contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

No Employment Contract

Nothing in the plan or this summary plan description gives any rights of continued employment to any employee or in any way prohibits changes in the terms and conditions of, or the termination of, employment of any employee covered by the plan.

No Retroactive Termination of Coverage

Generally, coverage under the plan may not be terminated retroactively. However, coverage will be retroactively canceled or terminated (“rescinded”) if an enrollee acts fraudulently or intentionally makes any material misrepresentation of fact. Each enrollee is responsible for providing accurate and true information to WageWorks and McKesson representatives. This includes, but isn’t limited to, providing accurate information about family status, place of residence, age, relationships and other information that’s required to enroll in the plan and to receive benefits under the plan.

It’s each enrollee’s responsibility to notify WageWorks and McKesson representatives immediately if any previously furnished information is no longer correct (e.g., if a spouse ceases to be eligible because of divorce or legal separation or if a child ceases to qualify as a dependent). Failure to do so will result in retroactive cancellation of coverage of the enrollee. The enrollee will also be required to make the plan whole for any losses incurred on account of the fraud, misrepresentation or material omission. Coverage is also retroactively canceled upon an enrollee’s failure to pay any required contributions, regardless of the reason for non-payment.

No Vested Interest

No individual has any rights under the plan except as and only to the extent expressly provided in the official plan document.

Plan Amendment and Termination

Nothing in the plan or this summary plan description shall prevent any future amendments to the benefits provided under the plan, or the contributions or eligibility criteria required for participation in plan. The Company reserves the right to amend or terminate the plan in whole or in part at any time and for any reason in its sole discretion. This includes, but isn’t limited to, increasing contributions or reducing benefits.

Plan Interpretation and Authority to Delegate

The plan administrator has the sole and exclusive right and discretionary authority to interpret the terms and provisions of the plan and to determine any and all questions arising in connection with the administration thereof, and to delegate such authority and discretion to designated person or persons, including claims administrators.

Protected Health Information

McKesson is committed to protecting the privacy and security of participants’ health information and has undertaken efforts to comply with all applicable laws and regulations intended to protect the privacy and security of such information, including the privacy regulations of the Health Insurance Portability and Accountability Act (HIPAA). If you have any questions regarding the plan’s privacy policies and procedures, please refer to the Notice of Privacy Practices provided to you upon your enrollment. If you need another copy of the Notice, please call the HR Support Center.

The plan’s privacy practices may be changed at any time at the plan administrator’s sole discretion. If any material revision is made to the plan’s Notice of Privacy Practices, the revised notice will be distributed in accordance with applicable law.

34

The following words and phrases when used in this summary plan description will have the meanings as set forth below.

Claims AdministratorThe claims administrator is WageWorks — an outside firm with which the Company contracts to administer benefits under the plan. The claims administrator for appeals is WageWorks.

CompanyMcKesson Corporation, and any successor by merger, consolidation or otherwise that assumes the obligations of the Company under the plan.

CosmeticA procedure, service, supply or drug that changes or improves appearance without significantly improving physiological function, as determined by the claims administrator. For example, reshaping a nose with a prominent bump may improve appearance, but won’t improve the breathing function.

Dependent Care Center A place that provides care for more than six persons (other than persons who live there) and receives a fee, payment or grant for providing services for any of those persons, even if the center isn’t run for profit.

Dependent Care Flexible Spending AccountA tax-advantaged account that allows an employee to set aside a portion of earnings to pay for eligible dependent care expenses on a before-tax basis.

Domestic PartnerRefers to:

• A same-sex or opposite-sex couple in a valid civil union as of the date of the civil union as provided under applicable state law, or

• A domestic partnership registered with any state or local government domestic partnership registry as of the date provided under the applicable state or local registry law, or

• A same-sex or opposite-sex partnership as of the date that the partnership meets all of the following requirements: (1) the partnership is an intimate, committed relationship of mutual caring; and (2) the McKesson employee and the domestic partner share the same principal residence; and (3) the McKesson employee and the domestic partner agree to be responsible for each other’s basic living expenses during the domestic partnership and also agree that anyone who is owed these expenses can collect from either the employee or his/her domestic partner; and (4) the McKesson employee and the domestic partner are both age 18 or older (or the age of consent in the state of residence) and mentally competent to enter into contracts; and (5) the McKesson employee and the domestic partner are both not currently married nor legally separated; and (6) the McKesson employee and the domestic partner aren’t currently in a valid civil union; and (7) the McKesson employee and the domestic partner aren’t so closely related by blood that legal marriage would otherwise be prohibited; and (8) the McKesson employee and the domestic partner don’t have a different domestic partner now; and (9) the McKesson employee and the domestic partner haven’t had a different domestic partner during the six month period prior to their domestic partnership (Note: this doesn’t apply if either the McKesson employee or domestic partner had a different domestic partner who died).

Eligible Child See Qualifying Child.

Eligible Relative See Qualifying Relative.

Glossary

35

Employee An active employee on the U.S. payroll of the Company,its subsidiaries or its affiliates who meets all of the following requirements:

• Is scheduled to work not less than 30 hours per week on a regular and continuous basis;

• Is performing in the customary manner all of the regular duties of his/her occupation either at one of the Company’s business establishments or at some location to which Company business requires the employee to travel, or isn’t performing his/her regular duties due to illness, provided that he/she has already commenced performing his/her regular duties of employment prior to his/her illness, and

• Isn’t in one of the excluded categories described below.

Notwithstanding the foregoing, the Company may exclude from participation in this plan designated employees or former employees who are covered by another employer’s plan. Excluded Categories — “Employee” doesn’t include an individual for any period in which he/she is:

• Covered by a health plan established pursuant to collective bargaining (other than this plan).

• Covered by another healthcare flexible spending account plan to which the Company contributes.

• Designated by the Company, its subsidiaries or its affiliates as a seasonal or temporary employee.

• Compensated for services by a person other than the Company, its subsidiaries or its affiliates and for any reason is deemed to be an employee.

• Not on the U.S. payroll of the Company, its subsidiaries or its affiliates and for any reason is deemed to be an employee.

• A leased employee within the meaning of Section 414(n) of the Internal Revenue Code, or would be a leased employee but for the period-of-service requirement of Code Section 414(n)(2)(B), and who is providing services to the Company, its subsidiaries or its affiliates.

• Subject to a written agreement that provides that such individual shall not be eligible to participate in the plan.

A “seasonal employee” means an individual hired to work for a portion of each year on a repetitive basis in a job designed to cover a seasonal operating need. A “temporary employee” means an individual hired to work for a limited period of time to perform a specific project with the understanding that once the project is complete, his/her service will no longer be required by the Company.

If, during any period, the Company, its subsidiaries or itsaffiliates haven’t regarded an individual as an employeeand, for that reason, haven’t withheld employment taxeswith respect to that individual, then that individual isn’t anemployee for that period, even in the event that the individualis determined, retroactively, to have been an employee duringall or any portion of that period.

An individual’s status as an employee is determined bythe Company, its subsidiaries or its affiliates and all suchdeterminations are conclusive and binding on all persons.

As used in this definition, “subsidiaries and affiliates” meansall subsidiaries and affiliates of the Company whose employeesare designated by the Company as eligible to participate in theplan on a basis that doesn’t discriminate in favor of officers,shareholders and other highly compensated individuals;however, any such entity will cease to be a subsidiary oraffiliate when that entity ceases to be a subsidiary or affiliate ofMcKesson Corporation.

ERISAThe Employee Retirement Income Security Act of 1974, as amended.

Flexible Benefit Plan The McKesson Corporation Flexible Benefit Plan, which is a “cafeteria plan” within the meaning of Section 125 of the Internal Revenue Code, and provides eligible employees with a choice of receiving certain qualified benefits provided in lieu of taxable cash compensation.

Healthcare Flexible Spending AccountA tax-advantaged account that allows an employee to set aside a portion of earnings to pay for eligible medical, prescription medicine, dental and vision expenses on a before-tax basis. (This FSA isn’t available to HSA, HSA Plus or Kaiser Plus plan members.)

Glossary

36

Health Savings Account (HSA)-Compatible Flexible Spending AccountA tax-advantaged account that allows an employee to set aside a portion of earnings to pay for eligible dental and vision expenses on a before-tax basis.

HR Support Center/McKesson Benefits CenterA resource for plan members to obtain benefits information. Call 855.GO.MCKHR (855.466.2547) and press 1 for Health, Vitality and Pension questions. Benefit experts are available 7 a.m. - 6 p.m. Central time, M-F. Written correspondence should be sent to the McKesson Benefits Center at PO Box 7139, Rantoul, IL 61866-7139.

Internal Revenue Code The Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder. Also referred to as the IRC or Code.

IRS The Internal Revenue Service.

Medicare Health Insurance for the Aged and Disabled Program under Title XVIII of the Social Security Act.

Medicare Entitlement (COBRA)For purposes of COBRA continuation coverage, a qualified beneficiary becomes entitled to Medicare benefits on the effective date of enrollment in either part A or B, whichever occurs earlier. Therefore, simply being eligible to enroll in Medicare doesn’t constitute being entitled to Medicare benefits.

Payroll The system used by the Company to pay those individuals it regards as its common law employees for their services and to withhold employment taxes from the compensation it pays such common law employees. Payroll doesn’t include any system used to pay individuals whom it doesn’t regard as its common law employees and for whom it doesn’t actually withhold employment taxes (including, but not limited to, individuals it regards as independent contractors) for their services.

Plan AdministratorMcKesson Corporation.

Plan SponsorMcKesson Corporation.

Glossary

Plan Year January 1 – December 31. (Related financial records, however, are kept on a plan-year basis from April 1 through March 31.)

Qualified Medical Child Support OrderA judgment, decree or order (including approval of a domestic relations settlement agreement) issued by a court of competent jurisdiction or through an administrative process established under state law that creates or recognizes the right of a covered employee’s child to receive benefits for which the covered employee is entitled under this plan, and which is determined by the plan administrator to meet the requirements of a qualified medical child support order under Section 609 of ERISA.

Qualifying Child A qualifying child is generally defined under Internal Revenue Code §152, and modified by §105(b) for healthcare FSA and HSA-compatible FSA coverage purposes. A qualifying child:

• Is any of the following: the covered employee’s child, grandchild, stepchild, foster child or adopted child; brother, half-brother or stepbrother; sister, half-sister or stepsister; nephew or niece; or the child or grandchild of any of these relatives.

• Resides with the covered employee for more than half the calendar year. However, temporary absences due to illness, education, business, vacation or military service are disregarded. The covered employee must maintain a home for the child during the temporary absence and the child must be expected to return after the absence.

• Provides no more than 50% of his/her own support for the calendar year.

• Is a citizen, national or resident of the U.S.; or a resident of Canada or Mexico (unless the child is adopted).

Additional Rules for Healthcare FSA and HSA-Compatible FSA — The child must be under the age of 26 or be physically or mentally incapable of self-care as of the last day of the calendar year during which care is provided. However, some adult children don’t have to meet all of the requirements listed above. An adult child is eligible through December 31 of the year during which that child turns age 26 regardless of his/her residency, employment, financial dependence, student status, marital status, or status as a tax dependent. This exception applies to the covered employee’s natural child, stepchild, adopted child, a child placed with the employee for adoption or a foster child.

37

Glossary

Qualifying Child, continued Additional Rules for Dependent Care FSA — For the dependent care FSA:

• The child must be under the age of 13, or physically or mentally incapable of self-care when the dependent care is provided. If the child is 13 or older and physically or mentally incapable of self-care, he/she must regularly spend at least eight hours a day in the covered employee’s home and not file a joint tax return with his/her spouse for the calendar year.

• The covered employee must not be the qualifying child or relative of another person.

Special Circumstances — Divorced or Separated Parents: An FSA may be used if the covered employee has custody of his/her child for a longer period during the year than the child’s other parent. In addition, the covered employee must provide more than half of the child’s financial support, and the child must be claimed as a dependent on the covered employee’s federal income tax return. The covered employee should check with a tax advisor to see if special rules apply that would enable the child to be claimed by the non-custodial parent or by both parents.

Tie-Breaker Rules: If two or more people want to claim the same child as their qualifying child, the person who has the right to is: (1) the child’s parent if one person is the child’s parent and the other isn’t, (2) the parent with whom the child lives with longest in the year if both people are the child’s parents, (3) the parent with the higher adjusted gross income if both people are the child’s parents and the child lives equally with both during the year, or (4) the person with the higher adjusted gross income if both people aren’t the child’s parents.

Qualifying Relative A qualifying relative is generally defined under Internal Revenue Code §152, and modified by §105(b) for healthcare FSA and HSA-compatible FSA coverage purposes. A qualifying relative:

• Is any of the following: the covered employee’s child, grandchild, stepchild, foster child or adopted child; brother, half-brother or stepbrother; sister, half-sister or stepsister; nephew or niece; the child or grandchild of any of the relatives listed above; the covered employee’s father, grandfather or stepfather; mother, grandmother or stepmother; uncle or aunt; or son-, daughter-, father-, mother-, brother- or sister-in-law. Or, any other person who resides with the covered employee as a member of the covered employee’s household for the entire year (while not in violation of local law).

• Won’t be claimed by any other person as a qualifying child for the calendar year.

• Is a citizen, national or resident of the U.S.; or a resident of Canada or Mexico (unless the relative is an adopted child).

• Receives more than 50% of his/her support for the calendar year from the covered employee.

Additional Rules for Dependent Care FSA — For the dependent care FSA, the covered employee must not be the qualifying child or relative of another person and the relative must:

• Reside with the covered employee for more than half the year. However, temporary absences due to illness, education, business, vacation or military service are disregarded if the covered employee maintains a home for the relative during the temporary absence and the relative is expected to return after the absence.

• Regularly spend at least eight hours a day in the covered employee’s home.

• Not file a joint tax return with his/her spouse for the calendar year (unless the qualifying relative is the covered employee’s spouse).

SpouseThe person to whom the covered employee is lawfully married under any state law. This includes individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that doesn’t recognize such marriages. For purposes of this definition, “state” means any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the Northern Mariana Islands, any other territory or possession of the United States, and any foreign jurisdiction having the legal authority to sanction marriages.

UPointdigital.alight.com/mckessonThe website where employees go to review and manage their Total Rewards.

38

Notes

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

39

March 2019

I M P R E S S C O M M U N I C A T I O N S I N C .

P R O P R I E T A R Y F O R M U L A S

Flexible Spending Accounts AdministratorWageWorks P.O. Box 14053

Lexington, KY 40512 877.353.9236 (Fax)877.924.3967www.wageworks.com

HR Support Center855.GO.MCKHR (855.466.2547)Your source for benefits information and gateway to an advocate. Press 1 for the McKesson Benefits Center for Health, Vitality and Pension questions. Benefit experts are available: 7 a.m. - 6 p.m. Central time, M-F. Oprime 1 para asistencia en español a través del McKesson Benefits Center.

UPointdigital.alight.com/mckessonYour online destination for reviewing and managing your Total Rewards.

Contact WageWorks with any questions regarding your FSA. If you have eligibility or election questions or concerns, contact the HR Support Center.