As you may know, Medicare’s new voluntary prescription drug benefit (referred to as Medicare Part D) is scheduled to become effective on January 1, 2006 . Since you and/or your spouse are currently covered by the NASI Welfare Fund, you may be wondering how Medicare’s new Part D will affect you in 2006. It is our opinion that this new government program should have little or no impact on you and your family. Here is more of what we know so far.

Medicare Prescription Drug Plans (PDPs) will be available for Medicare eligible retirees on an individual basis starting January 1, 2006. Private insurance carriers will offer the basic coverage for a monthly premium estimated by the government at about $35.00 per person. The benefits will be based on a standard plan design determined by Medicare.

Medicare recognizes that many plan sponsors like us already provide extensive retiree prescription drug coverage through their own plans. To encourage sponsors like NASI to maintain their existing retiree prescription drug plans and not cause disruption of benefits for retirees, Medicare will offer a partial subsidy of the cost for plans that provide benefits at least as generous as Part D. You should know that the NASI Welfare Fund already provides covered retirees a very generous prescription drug benefit that will surely qualify for this subsidy.

The initial enrollment period for individual Medicare Part D benefits will be from November 2005 through May 2006. Starting this summer, you will likely begin to receive direct mail marketing materials from private insurers encouraging you to join their new individual Part D benefit plans. As you review those materials, remember that you already have prescription drug benefits that are at least as good as (and, most likely, far better than) the retail plans being offered. As a result, there is no need for you to enroll in one of those retail prescription drug plans.

Under the law, to protect your eligibility for Medicare Part D enrollment at some future date, if necessary, without a penalty in the cost, you must either (1) enroll in one of the Part D retail plans when you are first eligible, or (2) have “creditable coverage” such as you now enjoy under the NASI Welfare Fund. The Trustees will obtain an actuarial determination that the prescription drug benefits you currently enjoy represent “creditable coverage”, so you will automatically be protected for Part D eligibility without penalty in the future if you should ever need to enroll.

Since you are covered by the NASI Welfare Fund already, no action is required. Remember, your coverage is as good as, and likely much better than, any Part D plans that will come to market this summer and fall. Not only is enrollment in a Part D plan unnecessary, it is important to understand that the Fund will not receive a federal subsidy for any eligible participant who enrolls in a Part D plan. That would mean fewer subsidy dollars from the government to offset a part of the cost of the Fund’s other great benefits.

Should there be any significant developments or actions you need to take to preserve your excellent prescription drug coverage, you will be notified on a timely basis. If you have any questions, however, please do not hesitate to contact the Fund Office.

Sincerely,

Board of Trustees