New York State Teamsters Benefit Funds Newsletter

HOT TOPIC

News and information from your Trustees and StaffSpring 2009

Over the past six years, the Health & Hospital Fund has experienced double digit increases in the total amount spent for prescription drugs. hether you are currently

retired, contemplatingretirement, or actively working with many years before you can even consider the thought of retirement, many of you have recently asked how the downturn in the markets has impacted our Fund’s performance and what changes, if any, are being considered by the Fund’s Board of Trustees. 2008 will long be remembered as a year that experienced unprecedented market events, not just in the United States but across the globe. The turmoil began in the summer of 2007 within the sub-prime market and quickly spread to a credit crisis negatively impacting many financial and market sectors. The government intervened to shore up the mortgage companies of Fannie Mae and Freddie Mac and insurance giant AIG. Lehman Brothers, one of the Wall Street investment banks, filed bankruptcy. The government also passed a $700 billion bailout package with the hope of restoring confidence and bringing stability to the markets. The bailout is still being distributed and the automotive indus-try was most recently granted assistance to keep the industry afloat. In the fourth quarter of 2008, the government finally confirmed what everyone had suspected, that the United States economy has been in a recession since late 2007. Recent troubling news included the $50 billion Ponzi scheme allegedly conducted by Bernard Madoff of Bernard L. Madoff Investment Securities LLC. This is believed to be the largest investor fraud ever attributed to a single individual. Our Fund did not have any money invested with this firm.

2008 Was A Negative Year for the Pension Fund For 2008, the Fund experienced negative net of fees returns of (29.593%). The Fund had an asset value of $2.278 billion as of December 31, 2007 and as of December 31, 2008 the value was at $1.455 billion. To put these results into per-spective, on the domestic equity side, the one year returns for certain benchmarks were as follows: Russell 3000 (-37.3%), Russell 1000 (-37.6%), Russell Mid Cap Growth (-44.3%), Russell Mid Cap Value (-38.4%), the S&P 500 return for 2008 was (-37%) and the rolling ten-year annualized return through December 2008 was (-1.4%). This was the first time since 1939 that the ten-year returns were negative. Losses were experienced in all sectors, including consumer discretionary (-36%), consumer staples (-18%), energy (-37%), financials (-54%), health care (-25%), industrials (-40%), information technology (-43%), materials (-4.7), telecom (-34%) and utilities (-29%). Foreign equities suffered significantly greater loses with returns from a (-45%) to the emerging markets falling a total of (-53.3%). The Fund professionals have been monitoring this situa-

Medco Prescription Coverage Management Programs

YEAR PRESCRIPTION PAYMENTS % INCREASE 2003 .......................... $17,819,397 ..............................29.83%2004 .......................... $21,222,426 .............................19.10%2005 .......................... $24,627,233 .............................16.04%2006 .......................... $26,995,873 .............................9.62%2007 .......................... $29,820,400 .............................10.46%2008 .......................... $32,951,649 .............................10.50%

To help control these rising drug costs, while trying to provide you with the coverage you need, the Board of Trustees approved a coverage management program that went into effect during January 2009. Coverage management determines how your prescrip-tion drug plan will cover certain medications. Each program is administered by Medco. The program requires Prior Authorization and Step Therapy for certain medications and a Quantity Duration control for specific classes of medications.

PRIOR AUTHORIZATON Traditional prior authorization requires that you obtain pre-approval as to whether the Plan covers your prescribed medication. If you have any questions regarding a medication that is being prescribed, call Medco at their customer service number. Below are examples of common medications that may require pre-approval:• Drugs for the treatment of allergy and asthma (such as Xolair‘)• Drugs for the treatment of cancer (such as Nexavar“, Sutent“ and Gleevec“)• Drugs used for the treatment of narcolepsy (such as Provigil“)• Drugs used to stimulate the production of red or white blood cells (such as Epogen“, Procrit “, Aranesp“, Neupogen“, Leukine“, Neulasta‘ and Neumega“) Smart prior authorization uses an automated process called Smart Rules. Smart Rules may automatically authorize or deny coverage. The following examples are medications that may qualify for coverage under the smart prior authorization process:• Drugs known as stimulants (such as Adderal“, Adderal XR“, Focalin“, Focalin XR“, Dexedrine“, Dexedrine Spansules“, Dextrostat“, Desoxyn“, Ritalin“, Ritalin SR“, Ritalin LA“, Metadate CD“, Methylin ER“, Daytrana “ and Strattera“),, which are used for conditions including attention deficit hyperactivity disorder (ADHD), narcolepsy, depression and multiple sclerosis.• Drugs used for the treatment of rheumatoid arthritis (such as Arava“, Enbrel“, Humira“, Kineret“, Remicade“, Orencia“ and Rituxan“)

AUTHORIZATION FOR ADDITIONAL QUANTITY OF MEDICATION For some medications, the plan may cover a limited quantity for a specified period of time. This program will alert the pharmacist when the total quantity of a medication requested exceeds the amount allowed.

See Medco story continued on page 2

Market Perspectives 2009W

Stock Market story continued on page 2

2 NYS Teamsters Benefit Funds Newsletter

Fund Implements New User ID To

Deter Identify TheftThe Health & Hospital Fund experienced a negative market return of (24.8%) for 2008. This perfor-mance has reduced the value of investments under management from $135,843,743 in December 2007 to $97,151,874 in December 2008.

As stated in prior issues of this newsletter, the contributions received by the Fund have not covered the benefits incurred and the Fund has relied on the investment income to cover the remaining balance. In 2008, the Fund came close to having the contributions cover the benefits but with a negative return on the assets, the Fund continues to operate with a deficit margin. The analysis of contributions to benefit costs incurred over the last six years is as follows:

The medications listed below will be authorized for limited quantity only. A coverage review will be needed to request additional quantities. • Drugs used for sleep disorders (such as Rozer-em“, Sonata“, Ambien“, Ambien CR“ and Lunesta“)• Drugs used to treat migraine headaches (such as Imitrex“, Amerge“, Frova“, Zomig“, Axert“, Maxalt“, Relpax“, and Migranol“) Note: This is not a complete list of affected medica-tions; medications listed above are subject to change. Be assured that the purpose of the program is not to deny any benefit, but to provide the prescription drug program with controls (checks and balances) to help ease the double digit increases that the Fund has been experiencing. To assist in this transition, you may visit Medco online at www.medco.com or call their Member Services at 1-800-939-2108. If you are a first-time visitor to medco.com, you will need to take a mo-ment to register. You will need to have your mem-

Medco Prescription Drug Management ProgramContinued from page 1

Health & Hospital Fund Update

VSP Vision Services has been your vision provider since January 1, 2008. You do not need an Identification Card to use your vision benefit. You just need to go to any VSP Teamster-covered provider and supply your Social Security Number and your VSP vision provider will obtain authorization for your benefits.

The figures above reflect a six year increase in contributions of $74,735,883 (77.7%) with the benefits shortfall over this same period of ($43,056,482). This trend unfortu-nately does not lend itself to long term viability. The benefits provided by the Fund are truly the best in our industry and in any other industry but the Trustees are faced with the harsh economic realities that they hear at the bargaining table during these very difficult recessionary times. The employers are looking at all options available to them and the Trustees recognize that this includes alternative health care plans. The Fund’s professionals are currently evaluating alternatives to present to the Trustees, and changes, if any, will be made based upon the most complete information available. The Trustees definitely need to reverse the above trend.

Preserving the best level of benefits within an affordable cost structure is the goal that needs to be under-stood by all participants of the Fund.

Percent Total Percent AnnualYear Contributions Increase Benefits Increase Shortfall2003 ........... $96,153,998 ......................................... $101,737,289 ........................................ ($5,583,291)2004 ........... $109,383,484 ...........13.75% ................ $118,197,398 ............. 16.18% ............... ($8,813,914)2005 ........... $122,264,761 ...........11.77% ............... $133,444,034 ........... 12.90% .............. ($11,179,273)2006 ........... $132,586,858 ...........8.44% ................. $144,102,793 ............ 7.99% ................. ($11,515,935)2007 ............ $151,847,875 ............14.52% ................ $157,455,971 ............. 9.27% ................ ($5,608,096)2008 ........... $170,889,881 ...........12.54% ................ $171,245,854 ............ 8.76% ................ ($355,973)

ber ID number and a recent prescription number available. Finally, the Health Fund Customer Service repre-sentatives are always available to assist you with all your health care needs. They can be reached at 1-877-698-3863.

To protect members from identity theft, the New York

State Teamsters Conference Pension & Retirement Fund and the New York State Teamsters Council Health & Hospital Fund will discontinue the use of your Social Security Number (SSN) on all written communication. An identification number will still be required on all benefit ap-plications that you submit to the Funds, but we have converted your SSN to a unique User ID number. When calling the Fund Office, you can reference this new User ID number as well as your Social Security Number for help with any questions. Note that this unique number is for the Fund Office’s use only. When you call our third party administrators (BC/BS, EBS and Medco) you will need to refer-ence the unique identification number issued on their ID cards.

VSP Provides Quality Eye Care For Participants

tion very closely over the past several months and have re-balanced the portfolio to correctly position the performance for the long term. Diversification of the assets among the various classes is at the core for prudent investing. The Fund’s investments include: domestic equity assets, private equity assets, interna-tional equity assets, emerging markets assets, domestic fixed income, international fixed income, real estate assets (REITS), hedge funds assets and infrastructure investments. The Fund’s portfolio managers are held accountable to manage their portfolios in the “risk managed” asset class that they have been retained. As uncomfortable and concern-ing as the current situation is, the Fund has seen periods of substantial negative market returns before and has weathered the storm. The Fund professionals continue to focus on core investment fundamentals and will control what is within their environment to provide the Fund with stable returns in both the good and bad markets.

Stock Market and Its Impact On Your Benefits Continued from page 1

VISIT OUR WEBSITE If you want to contact the Fund online for general information about your benefits, forms, pension application or other information, you can access our website at www.nytfund.org. We have links to other sites including participat-ing providers with Excellus Blue Cross/Blue Shield, VSP (Vision Plan Administrator), EBS (Dental plan administration, the IBT and some employers.

3 NYS Teamsters Benefit Funds Newsletter

Under the Pension Protection Act of 2006 (“PPA”), a multiem-ployer plan’s actuary must certify a plan’s funded status for a plan year within 90 days after the start of that plan year. As

indicated in the notice you received in April 2008 (the “Notice”), the actuary for the New York State Teamsters Conference Pension and Retirement Fund (the “Fund” or “Plan”) certified the Plan as being in “Endangered Status” for the Plan Year beginning January 1, 2008. The four different funding levels are:

• Critical (“red zone” )• Seriously endangered (“orange zone”)• Endangered (“yellow zone”) • None of the above (“green zone”).

As the plan sponsor of a plan in Endangered Status, the PPA re-quired the Board of Trustees to develop a Funding Improvement Plan. A Funding Improvement Plan must consist of schedules provided to the Fund’s Contributing Employers and Local Unions (“Bargaining Parties”) showing revised benefit structures, contribution structures, or both, that are designed to have the Fund achieve certain mandated benchmarks by the end of the ten-year Funding Improvement Period (the “Sched-ules”). More specifically, a Funding Improvement Plan must avoid a funding deficiency for any year during the Funding Improvement Period and improve the Plan’s funded status by at least one-third of the differ-ence between 100% and the Plan’s funded percentage by the end of the Funding Improvement Period. As indicated in the Notice, the Plan’s actuary certified that the Plan was expected to be 76% funded dur-ing 2008. Therefore, the Funding Improvement Plan’s Schedules were designed to increase the Plan’s funded percentage to 84% within ten years (100% - 76% = 24%; 1/3 of 24% = an 8% increase).

Funding Improvement Plan On November 25, 2008 the Board of Trustees formally adopted the Fund’s Funding Improvement Plan, which included three schedules for the 2009 Plan Year. One Schedule, the “Preferred Schedule,” requires annual contribution rate increases of 5% to maintain the current level of benefits. A second schedule, the “Alternative Schedule,” requires lesser annual contribution rate increases of 2%, but reduces the rate of future benefit accruals to .9% of contributions. The third schedule, the Default Schedule, will require no contribution rate increases, but reduces the rate of future benefit accruals to .5% of contributions. It is important to remember that the Board of Trustees has the sole and absolute authority and discretion to amend, construe and apply the provisions of the Funding Improvement Plan including the Sched-ules. Subject to the sole discretion of the Trustees, a Schedule is ad-opted when the Trustees receive substantiation that a collective bargain-ing agreement or other agreement requiring contributions to the Fund (“CBA”) includes terms consistent with the requirements of a Schedule. In general, the Trustees will consider the Bargaining Parties to have adopted a particular Schedule, and will consider the terms of a CBA to be consistent with the Funding Improvement Plan, when a Schedule is adopted in accordance with the Schedule’s requirements.

Annual Review of Funding Improvement Plan and Schedules The Trustees will review the Funding Improvement Plan and its Schedules annually with the assistance of the Fund’s actuary, as they find necessary. If, for example, the Fund’s actual experience does

not reflect the assumptions used to develop the Fund-ing Improvement Plan and its Schedules, the Trustees may amend or modify the Funding Improvement Plan and/or its Schedules, based on the advice of the Fund’s actuary, to reflect the Fund’s experience over the preced-ing Plan Year(s). However, if the Bargaining Parties have adopted a CBA that complies with one of the Schedules, the contribution rate requirements in the Schedules will continue for the duration of that CBA. Worker, Retiree & Employer Recovery Act of 2008 Recognizing the upheaval in the market and in a measure to reduce the cash burden on plan sponsors, the House of Representatives and the Senate passed the Worker, Retiree and Employer Recovery Act of 2008, which among other things, provides some funding relief for defined benefit pension plans. On December 23, 2008, President Bush signed the bill and it is now law. This new law provides the Fund’s professionals and Trustees short term relief in regards to updating the existing Funding Improvement Plan and implementation of a Rehabilita-tion Plan that would otherwise be necessary if the plan entered Critical Status (the “red zone”) in 2009. The Board of Trustees and the Fund’s legal counsel are currently in the process of analyzing the legislative relief provided under this Act to determine the best possible course of action for the Fund. The Fund’s actuaries must again certify the Plan’s funding status and the Fund will be sending out the Annual Funding Notice to participants on or before April 30, 2009. Any questions that you may have should be directed to the Pension & Retirement Fund at (877) 698-3863.

We all look forward to working and retiring on our own terms, but unfortunately some of us may become totally and per-

manently disabled. The Pension and Retirement Fund provides a benefit if you become totally and permanently disabled. In addition to qualifying for a Social Security Disability Award, you must have a minimum of ten (10) years of Future Service Credit and (i) must not have incurred a Break in Service Year immediately prior to the year of the effective date of your Social Security Disability Award except for a Break in Service Year due to an illness or injury which prevented you from working in comparable employment, and (ii) the illness or injury must not have been a result of the Participant’s own criminal activity or an intentional, self-inflicted injury. To determine whether you qualify for this benefit, the Pension and Re-tirement Fund recommends that you submit a written application to the Fund Office at the same time that you file for your Social Security Dis-ability Award. Along with your application, the Pension Fund requires that you submit proof of your filing for Social Security Disability ben-efits. Your application will remain on file with the Fund Office until the Social Security Administration (SSA) has rendered a decision on your claim, which may take some time (the Fund is aware of the SSA taking as long as three years to issue a final decision for some applicants). It is important to remember that if your Social Security Disability Award begins more than twelve (12) months before you apply with the Fund for your temporary disability benefit, the Plan allows for only twelve (12) months of retroactive disability benefit payments. If you have any questions regarding this benefit, you should contact the Pension & Retirement Fund directly and they will assist you with all of your questions.

HOW THE PENSION PROTECTION ACT OF 2006 IMPACTS YOU

Disability Pension Benefit

New York State Teamsters Benefit Funds

NEWS FROM OUR TIP FILE TIP #02

151 Northern ConcourseSyracuse, NY 13212

(315) 455-9790Fax: (315) 455-1237

E-MAIL: benefits@nytfund.org

NEW YORK STATE TEAMSTERS BENEFIT FUNDS BOARD OF TRUSTEES

LABOR TRUSTEESGary R. Staring

Co-Chairman

John BulgaroFredrick J. CarterRonald G. Lucas

EMPLOYER TRUSTEESMichael S. Scalzo, Sr.

Co-Chairman

Daniel W. SchmidtTom J. Ventura

EXECUTIVE ADMINISTRATORKenneth R. Stilwell

NYS Teamsters Benefit Funds ...............315-455-9790 TOLL FREE ..................................... 1-877-698-3863Excellus Blue Cross/Blue Shield Claims (Supreme Plan) .................. 1-800-414-8555 Claims (Select Plan) ......................1-877-650-5840 Inpatient Admissions Pre-Cert ........1-800-537-7313 Participating Providers .................. 1-800-810-2583Medco (Prescription Drugs) .............. 1-800-939-2108EBS Benefit Solutions (Dental) ......... 1-800-803-5773VSP (Vision Benefits) ........................1-800-877-7195Legal Benefit Plan ............................ 1-888-697-8527The Hartford (Disability) ................. 1-800-538-8439Policy #LNY 616 134

Understanding the Difference Between Emergency Care and Urgent Care

New York State TeamstersBenefit FundsP.O. Box 4928Syracuse, NY 13221-4928

FORWARD SERVICE REQUESTED

DO YOU HAVE QUESTIONS

ABOUT YOUR BENEFITS?

Contact the Fund Office or the Benefit Provider directly using one of the telephone numbers below:

If you or a loved one is seriously hurt, you know to go directly to the emergency room at the nearest hospital. But what about minor cuts, sprains, aches and pains? For injuries that need immediate attention, but are not serious or life threatening, consider an urgent care facility. With urgent care you get the immediate care you need, often without the wait or rush that can come when the emergency room is busy. Plus, it usually costs much less than the Emergency Room.

URGENT CARE IS IDEAL FOR:• Minor cuts, bruises or burns;• Muscle strains or sprains; or • Cold and flu treatment.

GO TO THE EMERGENCY ROOM IMMEDIATELY FOR:• Any life threatening injury;• Behavioral conditions that endanger the person or others;• Serious problems with a person’s bodily functions; or• Loss of limb, puncture wounds or deep cuts.

If you are not sure where to go to get the care you need, contact your doctor. He or she will be able to help you decide where to go. Remember to contact your doctor after getting urgent or emergency services for any follow-up care you may need.

To locate the urgent care center closest to you, call 1-800-810-BLUE. You will also find this number on the front of your member ID card for when you are away from home.

HAVE YOU MOVED RECENTLY? Remember that if you change your address, you need to contact the Fund office to keep your records current. The Fund sends out important updates on your benefits throughout the year. An incorrect address could delay your receipt of this important information. If you have changed your address, please contact the Health Fund Member Services at (877) 698-3863 or visit the website at www.nytfund.org to fill out a change of address form and mail it to the Fund office.