Benefit Funds Newsletter New York State Teamsters

1 New york State Teamsters Benefit Funds NewsletterHOT TOPICNews 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 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.

2 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.

3 2008 Was A Negative Year for the Pension fund For 2008, the fund experienced negative net of fees returns of ( ). The fund had an asset value of $ billion as of December 31, 2007 and as of December 31, 2008 the value was at $ 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 ( ), Russell 1000 ( ), Russell Mid Cap Growth ( ), Russell Mid Cap Value ( ), the S&P 500 return for 2008 was (-37%) and the rolling ten-year annualized return through December 2008 was ( ). 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 ( ), telecom (-34%) and utilities (-29%).

4 Foreign equities suffered significantly greater loses with returns from a (-45%) to the emerging markets falling a total of ( ). The fund professionals have been monitoring this situa-Medco Prescription Coverage Management ProgramsYEAR PRESCRIPTION PAYMENTS % INCREASE 2003 ..$17,819,397 ..$21,222,426 ..$24,627,233 ..$26,995,873 ..$29,820,400 ..$32,951,649 .. 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 AUTHORIZATON Traditional prior authorization requires that you obtain pre-approval as to whether the Plan covers your prescribed medication.

5 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.

6 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 Medco story continued on page 2 Market Perspectives 2009 WStock Market story continued on page 22 NYS Teamsters Benefit Funds NewsletterFund Implements New User ID To Deter Identify TheftThe Health & Hospital fund experienced a negative market return of ( ) 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.

7 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.

8 To assist in this transition, you may visit Medco online at or call their Member Services at 1-800-939-2108. If you are a first-time visitor to , 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 UpdateVSP 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 ( ) 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.

9 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 ..$118,197,398 ..($8,813,914)2005 ..$122,264,761 ..$133,444,034 ..($11,179,273)2006 ..$132,586,858 ..$144,102,793.

10 ($11,515,935)2007 ..$151,847,875 ..$157,455,971 ..($5,608,096)2008 ..$170,889,881 ..$171,245,854 ..($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 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.