As we told you previously, Medicare’s new voluntary prescription drug benefit (referred to as Medicare Part D) is currently 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 prescription drug benefit will affect you in 2006. It continues to be our opinion that this new government program should have little or no impact on you and your family because of the excellent coverage you currently enjoy. Please continue reading below.

Medicare prescription drug plans (PDPs) will be available for Medicare-eligible retirees on an individual basis starting January 1, 2006. It now appears that private insurance carriers will offer the basic coverage for a monthly premium in the range of about $20 to $35 per person per month. The benefits will be based on a standard plan design already determined by Medicare, although plans providing richer benefits will also be available at a higher cost.

Medicare has recognized that many plan sponsors like NASI already provide extensive retiree 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 to provide benefits at least as generous as those under Part D. You should know that the NASI Welfare Fund already provides those eligible for Medicare a very generous prescription drug benefit that qualifies for this subsidy.

The initial enrollment period for individual Medicare Part D benefits will be from November 15, 2005 through May 15, 2006 . You may have already begun to receive direct mail marketing materials from private insurers encouraging you to join their new individual Part D benefit plans. As you review these 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 these retail prescription drug plans. Said another way, we encourage you to not enroll in a different Part D benefit plan because enrolling in a different Part D benefit plan will prevent the NASI Welfare Fund from receiving any subsidy from Medicare on your behalf.

Under the new 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 had “creditable coverage” such as you now enjoy under the NASI Welfare Fund. The Trustees have obtained an official determination that the prescription drug benefits that 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. You will receive a notice to this effect in the near future and yearly thereafter.

Since you are covered by the NASI Welfare Fund already, no action is required on your part. Remember, your coverage is as good as, and likely much better than, any Part D plans that are available in the marketplace. 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.

You may also be receiving information about coverage you can purchase that supplements Medicare and also provides prescription drug coverage. These are sometimes referred to as Medigap or Medicare plus Choice plans. Please understand that if you drop your existing retiree coverage with the NASI Welfare Plan, you will not be allowed to re-enroll at a later date.

If you have any questions on the information in this notice, we encourage you to call the Fund Office.

Sincerely,

Board of Trustees