Sheet Metal Workers’ Local 73 Welfare Fund

Announcement Letter for Changes Effective January 1, 2005

November 2004

Dear Retired Participant and Eligible Dependents:

As Trustees, we value your years of service and are proud that the Welfare Fund has been able to offer retiree health care coverage. One of our main responsibilities is providing benefits that meet your needs today, while ensuring that the Welfare Fund remains financially stable in years to come. As you’ve heard in the past, rapidly rising health care costs coupled with poor economic conditions and fewer hours worked have caused a decrease in the assets that are available to pay benefits. As Trustees of your Welfare Fund, we have strived to provide a fair plan of benefits that balances the needs of both the Active and Retired members and their eligible dependents. Consequently, we are making the following changes to the Plan of benefits to enable the Welfare Fund to continue to provide the high-quality and affordable health benefits that you and your family deserve.

• The active contribution rate is increasing to help subsidize retiree coverage;
• The prescription drug deductible and co-payment are changing. Additionally, we are implementing a new out-of-pocket maximum;
• Non-PPO physician expenses will no longer apply to the out-of-pocket maximum and the Plan will pay Non-PPO physician expenses at 70% of the allowable charge;
• There is a new calendar year maximum for chiropractic care benefits; and
• Dental anesthesia coverage will be covered as a major service.

The information below describes the changes in detail. You will also be receiving additional information about the Plan in the future. Please read these letters carefully so you fully understand the changes.

New Prescription Drug Deductible, Co-Payment, and Out-of-Pocket Maximum (For All Eligible Retirees)

New Prescription Drug Deductible

Effective January 1, 2005, the $50 prescription drug calendar year deductible will apply to each covered person (instead of per family). The deductible applies to both the Retail and Mail Order programs combined. This means that each person in your family must pay the first $50 in prescription drug costs before the Plan pays any prescription drug benefits. Once you pay the first $50 in either Retail or Mail Order prescription costs (or a combination of both), the Plan will then pay benefits under the Retail and Mail Order programs.

Prescription Drug Co-Payment

Effective January 1, 2005, the method for calculating your prescription drug co-payment is changing. After you meet your $50 deductible per person, you will pay a percentage of the cost for each prescription.

The new prescription drug co-payments are:

Prescription Drug Example:

Charles has his prescription filled at the retail pharmacy. The prescription costs $80 and there is no generic available. Charles has already met his $50 deductible. Of the $80, Charles will pay $24.00 ($80 x 30%) and the Plan will pay $56 ($80 x 70%). Please note that prescription drug costs change frequently for the same medication. Check with the pharmacy you are using for the current cost of specific medications.

Out-of-Pocket Maximum

Effective January 1, 2005, a new calendar year prescription drug out-of-pocket maximum is being added to the prescription drug benefit. The new out-of-pocket maximum is:

• $2,000 per individual each calendar year
• $4,000 per family each calendar year

The calendar year prescription drug out-of-pocket maximum limits the amount you will have to pay. If your co-payments toward covered prescriptions reach the out-of-pocket maximum, the Plan pays 100% for any additional covered prescriptions for the rest of the calendar year. Only your prescription drug co-payments count toward the out-of-pocket maximum; your prescription drug deductible does not count toward the out-of-pocket maximum.

Non-PPO Physician Expenses Do Not Apply to the Calendar Year Medical Out-of-Pocket Maximum and Are Covered at 70% of the Allowable Charge (For Eligible Non-Medicare Retirees)

Currently, amounts that you pay for non-PPO hospitals and ambulatory surgical centers do not count toward the calendar year medical out-of-pocket maximum. Effective January 1, 2005, charges for non-PPO physicians will no longer apply toward the calendar year medical out-of-pocket maximum. However, expenses that you pay for PPO providers do apply toward the out-of-pocket maximum. In addition, non-PPO physicians’ services will be covered at 70% of the allowable charge. You will pay the remaining 30%. It’s your choice whether or not to use PPO providers. However, in order to receive the maximum amount of benefits available under the Plan, you need to use PPO providers.

Calendar Year Maximum for Chiropractic Care (For Eligible Non-Medicare Retirees)

Effective January 1, 2005, the calendar year maximum for payment of chiropractic care is $1,250 per person.

Dental Anesthesia Will Be Covered as a Major Service (For All Eligible Retirees) under the Dental Plan

Effective January 1, 2005, coverage for dental anesthesia will be paid as a major service under the dental plan at the 25% rate, subject to the deductible and calendar year maximum.

We believe these changes will strengthen the Welfare Fund’s financial position and continue to allow us to provide you and your family with quality health care. If you have any questions, please contact the Welfare Fund Office at 1-708-449-7373.

Sincerely,

Board of Trustees
Sheet Metal Workers’ Local 73
Welfare Fund