Part D Notice

Notice Regarding the U.S. Medicare Prescription Drug Programme
"Medicare Part D"
For Calendar Year 2010

To: Participants in a HQ's Medical Insurance Programme.
From: Mavis Carroll-Emory, Chief, Health and Life Insurance, New York
Date: 23 November 2009

Who should read this Notice

The present Notice is primarily intended for individuals who are enrolled in a Headquarters medical insurance programme - Aetna, Blue Cross, or HIP and who are either enrolled in Medicare, or have a dependent enrolled in Medicare.

If you or your covered dependent(s) are currently not covered by Medicare for any reason, e.g. you are not yet 65 years of age, please retain this Notice in the event that you or a dependent should become covered by Medicare within the next twelve months.

Contents

The present Notice contains important "creditable coverage" information about your prescription drug coverage under the UN Headquarters (UNHQ) Medical insurance programme, together with additional information about the Medicare prescription drug benefit.

Note that the Medicare prescription drug benefit is called Medicare Part D or simply Part D. Also note that "creditable coverage" is prescription drug coverage that pays out on average as much or more than Medicare's standard Part D prescription drug coverage.

There are 2 Annexes attached to this Notice:

• Annex 1 is a chart that summarizes the standard Medicare Prescription Drug benefit for 2010.
• Annex 2 lists most of the criteria for Medicare eligibility.

Please read this Notice and the attachments carefully and keep it where you can find it. It explains the options you have under the Medicare prescription drug coverage, and can help you decide if you want to enroll.

Note that because UN's prescription drug coverage is at least as valuable as Medicare prescription drug coverage in 2010, it is not necessary for any retired UN staff member to enroll in the new Medicare prescription drug coverage simply to avoid future late enrollment penalties. UN therefore recommends that UN programme participants not enroll in Medicare Part D.

Overall Summary

The 2010 enrollment period for Medicare prescription drug coverage began 15 November 2009 and ends 31 December 2009. Coverage elected during open enrollment becomes effective 1 January 2010.

The standard Medicare Part D programme for 2010 is shown on Annex 1. The 2010 Part D programme differs slightly from the 2009 programme. All Medicare Part D prescription drug programmes provide at least the standard level of coverage. Participating insurance companies are authorized to offer alternate plans; information on alternate plans is available from the insurance companies offering them. You pay a monthly premium to Medicare if you enroll for Medicare Part D drug coverage. The Medicare Part D plans that offer more coverage than the standard plan, charge a higher monthly premium. You will see in the example provided Annex 1 that the prescription drug coverage contained in the UNHQ programmes is clearly superior to the Medicare D standard prescription drug coverage.

The key points you need to keep in mind are the following:

1. The Medicare Part D prescription drug coverage is available to everyone with Medicare who elects to enroll for the prescription coverage and pay the required additional premium.

2. The UN has determined, with the assistance of a qualified actuary, that the prescription drug coverage provided under the UNHQ Medical insurance programme provides "creditable" coverage. This means that the prescription drug coverage provided under the UNHQ Medical insurance programme is equal to or better than the standard prescription drug coverage provided by Medicare.

3. Because the UNHQ Medical insurance programme provides "creditable" prescription drug coverage, whoever is currently enrolled in the UNHQ Medical programme does not need to enroll in a Medicare prescription drug programme to avoid late enrollment penalties.

4. While the UN advises retirees not to sign up for Medicare Part D prescription drug coverage, we encourage all eligible individuals to purchase Part B of Medicare - outpatient medical coverage - when you first become eligible for it, usually upon attainment of age 65. See Annex 2 for a summary of the Medicare Part B eligibility rules.

5. The UN further recommends that anyone already enrolled for Part B remain enrolled in Part B. As was the case in 2009, the co-pays for prescription drugs and physician office visits will be waived for those individuals who are enrolled in Part B and either Aetna or Blue Cross, and who obtain services from an Aetna or Blue Cross participating provider.

Statement of Creditable Prescription Drug Coverage

The UN has determined, with the assistance of a qualified actuary, that the prescription drug coverage offered through the UNHQ Medical insurance programme is, on average for all plan participants, expected to pay out at least as much as the standard Medicare prescription drug coverage will pay in 2010.

Because your existing UN coverage is on average at least as good as standard Medicare prescription drug coverage, you can keep your existing UN coverage and not pay a late enrollment penalty if you later decide to enroll in Medicare prescription drug coverage. You may need to produce this notice later, to prove that you are not required to pay a higher premium amount.

Additional Details

People who have Medicare are eligible to enroll in Medicare Part D and pay the additional premium. Retired staff members and their dependents who are presently covered in one of the UNHQ Medical programmes should not sign up for Medicare Part D. If you are enrolled in a UNHQ Medical programme, you have existing prescription drug coverage that is "creditable". Therefore, should you determine at some time in the future that it would be beneficial to join a Medicare prescription drug plan, you could do so without being subject to the late enrollment penalty.

If you participate in a UN programme and have already signed up for Medicare Part D, it is easy to disengage and eliminate monthly Part D premiums.

Each year you will have the opportunity to enroll in a Medicare prescription drug programme between 15 November and 31 December and you may also enroll when you stop working if you are then eligible for Medicare.

You may wish to compare your current prescription drug coverage and costs in the UN Medical programme to the plans offering Medicare prescription drug coverage in your area. By comparing the coverage and costs of the programmes, you can determine if adding the Medicare prescription drug coverage will be beneficial to you. Since you already have coverage that, on average, is as good as Medicare coverage, you can choose not to enroll in a Medicare prescription drug programme, or to enroll during a future enrollment period. You will not have to pay the higher premium (described below) as long as you do not go 63 days or longer without prescription drug coverage that is at least as good as Medicare.

You should also know that if you drop or lose your coverage with UN and don't enroll in Medicare prescription drug coverage after your current coverage ends, you may pay more to enroll in Medicare prescription drug coverage later. If you go 63 days or longer without prescription drug coverage that is at least as good as Medicare prescription drug coverage, your monthly Medicare Part D premiums will increase at least 1% for every month after your initial enrollment period that you did not have prescription drug coverage. For example, if you go 11 months without coverage, your premium will always be at least 11% more than what most other people pay. You will have to pay this higher premium as long as you have Medicare coverage. In addition, you may have to wait until the next November to enroll.

Detailed information about Medicare programmes that offer prescription drug coverage is available in the 2010 "Medicare and You" handbook published by Medicare. You may have received a copy in the mail already, or you can contact a Medicare office for a copy, or view the entire booklet online at www.medicare.gov. The UN Insurance Office does not have a supply of these handbooks. You may also contact Medicare by phone at 1-800-633-4227 (TTY users call 1-877-486-2048).

Remember: Keep this Notice with your other Insurance documents, where you can find it. If you choose to enroll in one of the new drug programmes approved by Medicare, you may need to produce this notice to prove that you are not required to pay a higher premium amount.