Important Notice About Your Prescription Drug Coverage and Medicare 

Please note the following information only applies to retired plan participants who currently are eligible or will be eligible for Medicare during 2008.

Please read this notice carefully and keep it where you can find it. This notice has information about your current prescription drug coverage with the State Farm Group Medical PPO Plan and the prescription drug coverage available for individuals with Medicare. It also explains the options you have under Medicare prescription drug coverage and can help you decide whether or not you want to enroll.

At the end of this notice is information about where you can get help to make decisions about your prescription drug coverage.

1. Medicare prescription drug coverage was effective January 1, 2006 to everyone with Medicare through Medicare prescription drug plans and Medicare Advantage Plans that offer prescription drug coverage. All Medicare prescription drug plans provide at least a standard level of coverage set by Medicare. Some plans may also offer more coverage for a higher monthly premium.
   
   
2. We have determined that State Farm’s Group Medical PPO Plan prescription drug coverage will pay more than or equal to what Medicare will pay through their prescription program and is considered Creditable Coverage.
   
   
3. Read this notice carefully - it explains the options you have under Medicare’s prescription drug coverage, and it can help you decide whether or not you want to enroll in Medicare’s prescription coverage.

Medicare’s Prescription Coverage – Things You Should Know:

• Individuals can enroll in Medicare prescription drug coverage when they first become eligible for Medicare and each year from November 15th through December 31st.  Beneficiaries leaving employer/union coverage may be eligible for a Special Enrollment Period to sign up for Medicare’s prescription drug coverage.
  
  
• If you drop or lose your coverage with the State Farm Group Medical PPO Plan, as long as you enroll in Medicare’s prescription drug coverage within 63 days of loss of coverage, you will be able to receive Medicare prescription coverage without any penalties.
  
  
• If you go 63 days or longer without prescription drug coverage or coverage that is less than Medicare’s coverage; your monthly Medicare prescription premium will go up at least 1% per month for every month that you did not have that coverage.

For example, if you go nineteen months without prescription coverage, your premium will always be at least 19% higher than what most other individuals pay. You will have to pay this higher premium as long as you have Medicare’s prescription coverage. In addition, you may have to wait until the following November to enroll in a Medicare prescription drug plan.

State Farm’s Group Medical PPO Plan Prescription Coverage – Things You Should Know:

• The State Farm Group Medical PPO Plan has determined that their prescription coverage is equal to or better than Medicare’s prescription drug coverage.
  
  
• You can choose to keep your State Farm Group Medical PPO Plan coverage, and not enroll in Medicare’s prescription drug coverage. As mentioned above, if at a later date you decide to drop your State Farm Group Medical PPO Plan coverage, or if you lose coverage, you will be able to enroll in Medicare’s prescription coverage without any penalties as long as you enroll within 63 days of losing your coverage.
  
  
• The State Farm Group Medical PPO Plan will receive a 28% tax-free subsidy based on prescription expenses for each qualified Medicare eligible participant who is eligible for Medicare’s prescription drug coverage but chooses not to enroll in Medicare’s prescription drug coverage.  State Farm will use this subsidy to offset the prescription drug expenses under the State Farm Group Medical PPO Plan.
  
   
• If you enroll in both the State Farm Group Medical PPO Plan and Medicare’s prescription program, State Farm WILL NOT be entitled to receive the subsidy for your eligible prescription expenses. 
  
  
• State Farm‘s prescription coverage through the State Farm Group Medical PPO Plan will not coordinate benefits with Medicare’s prescription drug coverage.

Summary of Prescription Options Available to You:

• You can enroll in State Farm’s Group Medical PPO Plan (which offers medical and prescription drug coverage); or
  
  
• You can enroll in Medicare’s prescription drug coverage and drop your State Farm Group Medical PPO Plan coverage (keep in mind this would mean losing both medical and prescription coverage). If you drop your State Farm Group Medical PPO Plan coverage, you will only be able to enroll in State Farm’s coverage during the Annual Enrollment process for the following year, or if a qualifying event occurs; or
  
  
• You can enroll in both State Farm’s Group Medical PPO Plan and Medicare’s prescription drug plan. (You will pay an additional monthly premium for Medicare’s prescription coverage and State Farm will not be able to collect the subsidy on your prescription expenses nor will we coordinate prescription benefits with Medicare.)

For More Information About This Notice or Your Current Prescription Drug Coverage:

Contact State Farm’s Human Resources Services Center (previously the Associate Services Center) at 1-877-272-1999.

Note: You will receive this notice annually and at other times in the future such as before the next period you can enroll in Medicare prescription drug coverage, and if the prescription coverage through the State Farm Group Medical PPO Plan changes. You also may request a separate copy of this letter.

For More Information About Your Options Under Medicare Prescription Drug Coverage:

More detailed information about Medicare plans that offer prescription drug coverage is in the “Medicare & You” handbook. You’ll get a copy of the handbook in the mail every year from Medicare. You may also be contacted directly by Medicare prescription drug plans. For more information about Medicare prescription drug plans:

• Visit www.medicare.gov for personalized help.
  
  
• Call your State Health Insurance Assistance Program (see your copy of the Medicare & You handbook for their telephone number).
  
  
• Call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
  
  
• For people with limited income and resources, extra help paying for Medicare prescription drug coverage is available. Information about this extra help is available from the Social Security Administration (SSA) online at www.socialsecurity.gov, or call them at 1-800-772-1213 (TTY 1-800-325-0778).

Date: October 2, 2007
Name of Entity/Sender: State Farm Group Medical PPO Plan/Total Rewards - Benefits
Contact: State Farm’s Human Resources Services Center (HRSC), previously the Associate Services Center (ASC)
Phone Number: 1-877-272-1999
Hours: Weekdays 7:00 a.m. – 6:15 p.m. Central Time (December through September) and 7:00 a.m. – 7:00 p.m. Central Time (October through November)

State Farm Group Medical PPO Plan
Medicare Prescription Drug Coverage
Frequently Asked Questions

What is the new Medicare Prescription Drug Coverage about?

Medicare’s prescription drug coverage is also known as the Medicare Prescription Drug, Improvement and Modernization Act of 2003 or Medicare Part D.  This legislation was passed in December 2003 and was effective January 1, 2006. 

This legislation was meant to provide Medicare eligible, low-income retirees and those with high drug costs a more affordable means of purchasing prescription medication.  The Medicare Prescription Drug Benefit was not designed or intended for individuals who are Medicare eligible but have equal or better coverage through their employers or former employers.

What are the enrollment dates for Medicare’s Prescription Coverage?

Individuals can enroll in a Medicare prescription drug plan when they first become eligible for Medicare and each year from November 15th through December 31st. 

Who will provide the prescription coverage under Medicare’s prescription coverage?

You will receive additional information from Medicare explaining who the Medicare Advantage and Prescription Drug Plan (PDP) sponsors are in your area. The various providers will contract directly with the government to provide prescription services.

What prescription medication will be covered through the Medicare prescription program?

The Prescription Drug Plan (PDP) or Medicare Advantage Plan will have their own list approved of medications. 

What about my State Farm Group Medical PPO Plan Prescription Drug Coverage?

Prescription drug coverage is automatically provided when you enroll in the State Farm Group Medical PPO Plan.  You pay one premium for both medical and prescription coverage. 

Which Plan provides better prescription coverage? 

The prescription coverage provided through the State Farm Group Medical PPO Plan is
equal to or better than Medicare’s Prescription Coverage. The State Farm Group Medical PPO Plan also provides coverage for a larger number of prescription drugs than the Medicare program.

Will employers/unions who continue to offer prescription coverage for Medicare eligible participants receive any type of reimbursement from the government?

Yes, State Farm and all employers/unions who continue to offer prescription drug coverage that is equal to or greater than Medicare’s prescription benefit will receive a subsidy for each Medicare eligible participant who does not enroll in Medicare’s prescription drug benefit.

The subsidy will be 28% of eligible prescription expenses between $275 and $5,600.  This subsidy is tax-free.  The State Farm Group Medical PPO Plan will use the subsidy to offset claim expenses under the Group Medical PPO Plan.

What if I enroll in State Farm’s Group Medical PPO Plan and Medicare’s Prescription Benefit?

State Farm will not penalize participants who enroll in both prescription programs (Medicare’s and State Farm’s Group Medical PPO Plan).  However, State Farm will not be able to collect the 28% subsidy on participants who sign up for both programs.  The subsidy can only be collected if the participant signs up for coverage through their employer (State Farm) and does not enroll in Medicare’s Prescription Drug Benefit.  

Will State Farm’s prescription program through the Group Medical PPO Plan coordinate prescription drug benefits with Medicare’s prescription drug coverage like they do on our medical claims?

No, State Farm’s prescription drug program through the Group Medical PPO Plan will not coordinate benefits with Medicare’s prescription drug coverage.

Can I enroll in Medicare’s Prescription Benefit later if I need to without penalties?

Yes, you can enroll in Medicare’s prescription drug coverage within 63 days of loss of coverage if you decide to discontinue your State Farm Group Medical PPO Plan coverage or if you lose your coverage.

When would I be penalized for signing up for the Medicare Prescription Benefit?

If you go 63 days or longer without any prescription coverage or coverage that is less than Medicare’s coverage your monthly Medicare prescription premium will go up at least 1% per month for every month that you did not have coverage.

For example, if you go nineteen months without prescription coverage, your premium will always be 19% higher than what most other people pay.  You will have to pay a higher premium for as long as you have Medicare prescription drug coverage.  In addition, you may have to wait until next November to enroll. 

How do I know if I should enroll in Medicare’s Prescription Benefit?

Medicare’s prescription coverage was meant to provide Medicare eligible, low-income retirees and those with high drug costs a more affordable means of purchasing prescription medication.  Medicare’s prescription drug coverage was not designed or intended for individuals who are Medicare eligible but have equal or better coverage through their employers or former employers. 

You will need to review the prescription coverage provided by Medicare and compare it to your State Farm prescription coverage to determine what is best for you.