Carol, desperate to spread holiday cheer, explains to everyone that she has begun decorating the house for Christmas with Phil's help (though it is already extremely decorative). She gathers the group and has them pull names from a hat for "Secret Santa." She has everyone eat the piece of paper with the name on it to maintain strict secrecy. Melissa mentions that she wants a pair of boots as a gift, but Carol demands that she keep it to herself to maintain the "Secret Santa" tradition.
Gail and Todd act awkwardly and suspiciously around one another, both mentioning that they are going Christmas shopping but clarifying that they are going to different places. Carol and Phil enter the room and begin decorating that room as well. Phil asks the group whether, in the spirit of the holiday, they can invite Phil 2 to move back in. Gail immediately disagrees, but Erica begrudgingly agrees.
Phil rushes off to tell Phil 2 the good news about being invited back into the house. Phil 2 reacts in a rather nonplussed manner, though Phil is very excited to tell him. Phil also spits out the piece of paper with his "Secret Santa" recipient into Phil 2's hand -- Phil got Erica's name and is giving her name to Phil 2, so Phil 2 can use the gift-giving occasion to make amends with Erica. Again, Phil 2 is nonplussed but agrees to switch names with Phil (giving Phil his own name, which Phil 2 originally pulled). As Phil leaves, he grumbles about Phil 2 not being more thankful for Phil helping him out.
In space, Mike Miller continues to be a drunken mess and accuses the worm Terry of judging him. He insults Terry, saying he is just a worm, and mentions that Terry doesn't know what it is like to be stuck in a pod for three years with only a bunch of worms and watching as all of his family members died.
Melissa finds her room covered in fake snow and Christmas decorations. Carol tells her that it is "Frosty's Lair." Melissa feigns loving the room. Carol lectures Melissa about the importance of keeping the gift-giving all a secret, even from Todd. Melissa tells Carol that she and Todd broke up because they just wanted different things. Carol comforts Melissa, who assures Carol that she is fine and that she is more worried about Todd.
Passing one another in the hallway, Gail and Todd share a quick, big kiss and quickly move away from one another.
That night, Phil 2 makes a speech about how he is thankful to one man in particular for helping him get back in the good graces of the group. Phil misunderstands and moves to embrace him, thinking Phil 2 is referring to him, but backs off when Phil 2 specifically says he is thankful to God (not Phil, as Phil thought). Carol, Phil, and Phil 2 sing along to "This Little Light of Mine."
Phil gives Phil 2 the Hope Diamond to give to Erica to win her back. Phil 2 refuses at first, saying that he already got Erica's gift, but gives in and takes it when Phil insists.
Mike Miller wakes up in the pod from a drunken stupor, amidst the mess he's made in the pod. He sees the picture of his family as it floats past and sighs sadly. He apologizes to Terry for taking his frustration out on him, mentioning that Terry is the only family he has left. As he's apologizing he notices that Terry is dead. He sadly moves Terry's name onto the RIP board and shoots Terry into space.
During the "Secret Santa" gift exchange, Carol tries to get everyone pumped up for gifting. Erica goes first, having drawn Carol's name. She gifts Carol a chair from Oprah's television studio, and J. Lo's green dress is under the chair. Carol is ecstatic and rushes off to try the dress on.
Todd goes next, prefacing that his gift is for someone special. Melissa smiles, thinking it is for her. Her face drops when Todd says it is for Gail. Gail is surprised, and Todd tries to backpedal and take back calling Gail special in order to not draw attention to their secret relationship. He takes the group outside where he shows them the ZZ Top car that he got for Gail, which she loves.
Phil goes next, saying he pulled his own name. He gifted himself Pitbull's yacht, and just as everyone starts getting excited about having parties on the yacht, Phil gleefully blows it up. Everyone is upset about that and walks away, leaving him there.
Back in the house, Carol presents her gift to Melissa. Melissa is exciting, realizing that Carol bought her the boots she wanted. She opens the gift to see that Carol elaborately decorated/bedazzled the boots. After a moment of shock, Carol presents Melissa the regular, undecorated boots that she bought as well, acknowledging that Melissa doesn't like the bedazzled boots, but Melissa thanks Carol for the boots she decorated and tells her she loves her and wants to keep the bedazzled boots instead.
Melissa presents her gift to Todd. She gives a heartfelt speech about remembering Todd's story about feeling rejected at his high school prom. She gives him a "do-over," saying that if anyone deserves to be prom king, it's Todd. She hands him a prom king sash, crown and scepter. Gail looks uncomfortable, as does Todd. Todd hugs Melissa awkwardly and seems unenthused about the gift.
Gail goes next, having drawn Phil 2's name. She presents him a wicker ball that was on the table, to his disappointment, having clearly not gotten him anything because she dislikes how he's treated Erica. Melissa notices that Todd has taken off his prom king sash and she looks upset.
Phil 2 goes next, and asks everyone to follow him to the solar house where his gift for Erica is. Phil makes Hope Diamond puns, still thinking that Phil 2 has taken his advice and is going to give Erica the Hope Diamond. The group all goes into the solar house where Phil 2 has set up a sonogram machine, allowing Erica to see her baby. Everyone is visibly moved when they see the baby. Erica grabs Phil's hand. Melissa looks over at Todd and smiles.
Phil rants to Carol about how he is "so done" with Phil 2, after Phil 2 didn't give Erica the Hope Diamond. Phil 2 pops in to invite Phil to get a drink. Phil quickly changes his tune, rushing off gladly to have a drink with Phil 2.
They drink a single beer together, in silence, at the nearby bar, and then head back to the house.
At the house, everyone is gathered around singing. Melissa interrupts, wearing the decorated boots that Carol gave her, and gives a speech about how holiday cheer has affected her. She apologizes to Todd, telling him what made her fall in love with him. She gets down on one knee and asks him to marry her. Before Todd can answer, Phil 2 collapses to the ground, grunting in pain and clutching his side.
In space, Mike Miller writes his own name on the RIP board and prepares to eject himself into space to die. Right before the airlock disengages, he spots a surviving worm which reinvigorates his hope, and tries to abort the airlock opening. He fails to do so and is thrust out into space.