Please read this notice carefully. It contains information about your current prescription drug coverage with the Public Employees Benefit Trust ("Fund") and new prescription drug coverage available January 1, 2006, for participants who have enrolled in Medicare Part D.

This notice also informs you where to find additional information to help you make decisions about your prescription drug coverage.

1. Starting January 1, 2006, new Medicare prescription drug coverage will be available to everyone with Medicare.
2. The Fund has determined that the prescription drug coverage offered is, on average for all Plan participants, expected to pay out as much or more as the standard Medicare prescription coverage benefit, i.e., it is equivalent on a gross basis to Medicare Part D coverage.
3. Read this notice carefully - it explains the options you have under Medicare prescription drug coverage and can help you decide whether or not you want to enroll.

Starting January 1, 2006, prescription drug coverage will be available to everyone with Medicare through Medicare prescription drug plans. All Medicare prescription drug plans will provide at least a standard level of coverage set by Medicare. Some Medicare Part D plans may also offer increased coverage for a higher monthly premium.

Since your existing coverage through the Fund is on average expected to pay out as much or more as the standard Medicare prescription coverage benefit, you can keep your coverage through the Fund and not extra if you later decide to enroll in Medicare Part D coverage.

Participants with Medicare can enroll in a Medicare prescription drug plan from November 16, 2005, through May 15, 2006. However, because you have equivalent prescription drug coverage through the Fund, you can choose to enroll in a Medicare prescription drug plan at a later date. Each subsequent year, you will have the opportunity to enroll in a Medicare prescription drug plan between November 15 through December 31.

However, if you enroll in a Medicare prescription drug plan and terminate your prescription drug coverage through the Fund, please be aware that you will not be able to get this coverage back through the Fund.

Therefore, before you decide to enroll in a Medicare prescription drug plan, you should closely compare your current coverage and costs through the Fund with the coverage and costs of the plans offering Medicare prescription drug coverage in your area, including which drugs are covered.

Please be advised that if you enroll in a Medicare prescription drug plan, you will have to pay an annual premium, an annual deductible, and a percentage of your prescription drug expenses. You should contact Medicare and the Fund Office if you wish to terminate coverage through the Fund and enroll in a Medicare prescription drug plan.

If you drop or lose your prescription drug coverage through the Fund, and you do not enroll in Medicare prescription drug coverage after your current coverage ends, you may have to pay more to enroll in Medicare prescription drug coverage later. If after May 15, 2006, you go for 63 days or longer without prescription drug coverage that is at least as good as Medicare's prescription drug coverage, your monthly medicare Part D premium will increase at least 1% per month for every month after May 15, 2006, that you did not have that coverage. For example, if you go 19 months without coverage, your premium will be at least 19% higher than the premiums for those who enrolled by May 15, 2006. You will have to pay this higher premium as long as you are enrolled in Medicare prescription drug coverage. In addition, you may have to wait until the next November to enroll.

for more information about this Notice or your current prescription drug coverage contact the Fund Office at 1-800-753-0222.

You may receive this notice at other times in the future, such as before the next period you can enroll in Medicare prescription drug coverage or if prescription drug coverage through the Fund changes. You may also request a copy of this Notice at any time by contacting the Fund Office at 1-800-753-0222.

More detailed information about Medicare plans that offer prescription drug coverage will be available in October 2005, in the "Medicare & You 2006" handbook. You will receive a copy of the handbook in the mail from Medicare. You may also be contacted directly by Medicare prescription drug plans. You can obtain additional information about Medicare prescription drug plans from the following:

• www.medicare.gov for personalized help
• Your State Health Insurance Assistance Program (see your copy of the Medicare & You handbook for their telephone number).
• 1-800-MEDICARE (1-800-633-4227); (TTY 1-877-486-2048

For people with limited income and resources, extra help paying for a Medicare prescription drug plan is available. Information about this extra help is available from the Social Security Administration (SSA). For more information about this extra help, visit SSA online at www.socialsecurity.gov or call 1-800-772-1213 (TTY 1-800-325-0778).

Remember: Keep this notice. If you enroll in one of the new plans approved by Medicare that offer prescription drug coverage after May 15, 2006, you may need to provide a copy of this notice when you enroll to show that you are not required to pay a higher premium for coverage.