MEDICARE

The Plan has specific rules for coordinating benefits with Medicare which are shown in the chart on page 72. To help you understand these rules, you should know that traditional Medicare involves two parts. Part A, which covers hospital charges, costs you nothing. Part B, which covers doctors’ bills and other medical care, involves a monthly premium. Beginning January 1, 2006, Medicare added Part D, prescription drug coverage. In most cases, Medicare Part D requires a monthly premium.

Medicare Part A – Hospital Charges
Enrollment in Part A is not automatic because eligibility for Medicare occurs at age 65, while the Social Security Retirement Age is now higher than age 65. You are strongly urged to enroll for Medicare Part A at age 65, even if you are still working and even if you have Earned Active coverage under the Health Plan. This will eliminate the possibility that you could be subject to benefit reductions for hospital charges during any period after your Earned Active coverage ends and you become eligible for either the Senior Performers Plan, the Self-Pay Program or Earned Inactive coverage. Remember, there is no premium for Part A.

Medicare Part B – Doctor Bills and Other Medical Care
Enrollment in Part B is not automatic. You must apply and pay a monthly premium and there are limits to the enrollment period. Because Part B requires a premium, it is understandable that you would not want to enroll until Medicare becomes your primary plan – when your Earned Active coverage ends and you become eligible for either the Senior Performers Plan, the Self-Pay Program or Earned Inactive coverage. However, if you wait too long, there will be a gap before Medicare begins. If this happens, Health Plan benefits will be reduced. To avoid this reduction, contact the Plan Office and Medicare to make sure that you enroll as soon as you know that your coverage under the Health Plan is no longer Earned Active.

Medicare Part D – Prescription Drugs
Prescription drug coverage is available through Medicare Prescription Drug Plans (PDPs). You may enroll in a PDP when you become eligible for Medicare or during the annual open enrollment period, which runs from November 15th through December 31st. Most people will have to pay a monthly premium for Part D.

Unlike Parts A and B, however, the Health Plan does not recommend that you enroll in a PDP. This is because the prescription drug benefits offered under the Health Plan are considered“creditable coverage”. This means they are more generous than the standard Medicare drug benefits except under very limited circumstances. Because of this, you can choose to stay covered under the Health Plan and receive primary prescription drug coverage. You will not be subject to a higher premium if you enroll in a Medicare PDP later.

There are three possible exceptions to who should enroll in a Medicare PDP:

• People with Limited Resources – Medicare includes special provisions for people with limited income and resources. The special provisions may allow you to receive Medicare prescription drug benefits with no premium and low or no deductibles and co-payments. If you think you may qualify, you should contact the Social Security Administration or complete their worksheet found on their Web site (www.ssa.gov) or the Plan’s Web site (www.sagph.org).
• Self-Pay Program Participants – If you are currently enrolled in the Self-Pay Extended Coverage Program and are also Medicareeligible, it is possible that, with the monthly Self-Pay premiums and prescription drug deductible and co-payments, you may pay more for the Plan’s coverage than through a Medicare PDP. Keep in mind that if you decide to enroll in a Medicare PDP and stop paying your Health Plan Self- Pay premiums, you will have no overage – hospital, medical, prescription drug or dental– under the Plan. You cannot drop just the prescription drug benefits and retain Self-Pay coverage for the other benefits. Also, if you terminate your Self-Pay coverage, you will not be able to get back into the Self-Pay Program.
• Medicare HMOs – If you are enrolled in a Medicare HMO, that plan may have automatically enrolled you in their Medicare PDP. The HMO may not allow you to drop just the prescription drug coverage without dropping the hospital and medical coverage as well.

When making your decision to enroll, you should compare the Plan’s coverage, including what medications are covered, with the coverage and cost of the Medicare PDPs in your area. If you enroll in a Medicare PDP and you have Earned Inactive, Self-Pay, Senior Performer or Extended Spousal eligibility, you will no longer receive prescription drug coverage under the Plan.

If you enroll in a Medicare PDP and later drop that coverage, you can again receive prescription drug coverage from the Health Plan, provided you still have Earned Inactive, Senior Performer or Extended Spousal eligibility. Your Health Plan prescription drug coverage will be effective the first of the month after your Medicare PDP coverage ends. Participants who were covered under the Self-Pay Program may not re-enroll in the Plan’s coverage.

If you are eligible for Medicare, the Plan will periodically mail you a Notice of Creditable Coverage. This Notice is also available upon request to the Plan Office and on the Web site: www.sagph.org. It advises you that the Plan’s prescription drug coverage is on average, as generous as the standard Medicare prescription drug coverage. You will need a copy of the Notice if you lose coverage under the Plan and want to enroll in a PDP without paying a higher premium.

Coordination of Benefits with Medicare
Federal law requires that this Plan be primary to Medicare for “active” participants who are age 65 or older. If you qualify for Alternative Earned Eligibility you are “active”. With respect to Covered Earnings, Medicare does not consider residual earnings as “active” earnings. Only sessional earnings are considered“active”. Accordingly, in determining whether you are “active” under Medicare’s rules and, therefore, whether this Plan or Medicare is primary, the rules in the following table apply.

* This is the minimum amount currently required to establish or continue Earned Eligibility. The minimum earnings requirement may increase in the future as outlined on page 2.
** Effective April 1, 2007.

It is possible for your status to change from year to year. If you return to work and earn the minimum requirement in sessional earnings (currently $13,790) or work the minimum Days of Employment (currently 74), the Plan becomes your primary plan. If your sessional earnings are less than the minimum requirement the next year, Medicare would become your primary plan. The Plan Office will let you know of any change in your eligibility and can tell you which plan is primary at any time.

IMPORTANT NOTES:
The following special rules apply to any participant or dependent who is eligible for Medicare, including participants or dependents age 65 or older and participants or dependents who are eligible for Medicare due to disability.

• With the exception of life insurance and AD&D benefits, no distinction is made between sessional and residual earnings in determining your eligibility for benefits. All earnings count the same toward Earned Eligibility. The distinction is made only for purposes of coordination of benefits with Medicare, the amount of life insurance and eligibility for AD&D benefits.
• Medicare is primary for Medicare disabled dependents of participants younger than age 65 whose Earned Eligibility is based on less than the minimum earnings requirement in sessions. The minimum earnings requirement is outlined in the chart on the prior page.
• Special rules apply to individuals with End Stage Renal Disease. Call the Plan Office for details.

If you or your dependent are eligible for other health insurance in addition to SAG-Producers and Medicare, please call the Plan Office to determine the order of claims payment.

There are three situations in which Plan benefits will be reduced for Medicare beneficiaries.

1. If you fail to enroll in Medicare Parts A and B when the SAG-Producers Plan is secondary.
   If you fail to enroll in Medicare Parts Aand B when this Plan is secondary to Medicare, this Plan’s benefits will be reduced by 80% because the Plan will coordinate benefits as though you received reimbursement from Medicare.
2. If you use a doctor who has opted out of Medicare.
   Medicare allows doctors the opportunity to opt out of the Medicare system and contract directly with patients to provide treatment outside of Medicare. A doctor who has opted out of Medicare must inform the patient that his or her services will not be covered by Medicare, and the doctor and patient must sign a written contract in which the patient agrees that the doctor’s charges will not be paid by Medicare. If you or your spouse use the services of a doctor who has opted out of Medicare, this Plan’s benefits will be reduced because the Plan will coordinate
   benefits as though you received reimbursement from Medicare.
3. If you fail to use a Medicare HMO provider when Medicare is primary.
   Medicare beneficiaries have a choice between traditional Medicare (Parts A and B) or a Medicare HMO. If you or your spouse are enrolled in a Medicare HMO as your primary plan, but do not use the HMO network providers, this Plan’s benefits will be reduced by 80%.

Remember, the Health Plan does not coordinate with Medicare for prescription drug coverage. If you have Earned Inactive, Self-Pay, Senior Performer or Extended Spousal eligibility and you enroll in a Medicare PDP you will not be eligible for the Health Plan’s prescription drug benefits.