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PIPE FITTERS’ WELFARE
FUND, LOCAL UNION 597
Summary of Material Modification
September, 2005 |
The Trustees of the Pipe Fitters’ Welfare Fund, Local 597 have made
the following revisions to the plan of benefits as described in this
announcement letter.
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1. |
COBRA rates adjusted effective October 1, 2005. |
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2. |
Reduced COBRA Premium for Employees Available for Work
Effective July 1, 2005. |
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3. |
Retiree Premiums Adjusted Effective January 1, 2006.
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4. |
Upon a participant’s death, enhanced options for
surviving spouses age 60 or older. |
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5. |
Combined annual out of pocket maximum of $5,000 for
Prescription and Specialty Drugs instead of the previous
separate $5,000.00 out of pocket maximum for each. |
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6. |
Dental cleanings/exams covered two times each calendar
year instead of requiring six months between dental cleanings
and exams. |
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7. |
Extended COBRA coverage during military service.
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8. |
Clarification of Retired Employee Eligibility Rule.
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| 9.
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Reimbursement of weekly disability benefits for non-work
related incidents eliminated. |
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10. |
Higher Welfare Fund premiums for retirees working in
related pipe fitting employment. |
Please keep this notice with your Summary Plan Description (SPD)
booklet for future reference. If you have any questions, please call the
Fund Office.
Sincerely,
Board of Trustees
1. COBRA Rates Adjusted Effective October 1,
2005
Because of favorable claims experience, the COBRA rates are being
increased by only a small amount effective October 1, 2005. The monthly
COBRA rates effective October 1, 2004 and October 1, 2005 are as
follows:
| COBRA Rates |
10/1/2004 |
10/1/2005 |
| Medical Only |
$755.00 |
$761.00 |
| Medical, Dental, & Vision |
$836.00 |
$841.00 |
2. Reduced COBRA Premium for Employees Available
for Work Effective July 1, 2005
The Board has established a subsidized premium during the first six
months of COBRA for participants who are available for work in the
industry. A participant is available for work in the industry if he or
she is employed by a Contributing Employer or if the participant is
registered on the Pipe Fitters’ Association, Local 597 U.A. out of work
list and is currently eligible for referral, as provided in Section
3.03(E) on page 17 of the SPD booklet.
This change was originally planned for January 1, 2006, but is being
implemented earlier. As of July 1, 2005, the Subsidized Premium is set
at 50% of the regular COBRA premium.
Because of the change in the COBRA rates provided in item 1 above,
the Subsidized Premium amounts will also be adjusted effective October
1, 2005. This means that for participants who are available for work in
the industry, the Subsidized COBRA Premium amounts effective October 1,
2005 are as follows: 1) for Medical only, the rate is $380.50 per month,
and 2) for Medical, Dental, and Vision, the rate is $420.50 per month.
3. Retiree Premiums Adjusted Effective January 1,
2006
The Board has established a policy of adjusting the Retiree Premium
every January 1. Retiree Premiums are established based on a percentage
of the COBRA rates. For a person eligible for Medicare, the Premium is
9% of the COBRA rate. For a person not eligible for Medicare, the
Standard Retiree Premium is 15% of the COBRA rate. Because the COBRA
rates have been revised, the Standard Retiree Premiums will be adjusted
effective January 1, 2006. The old and new monthly rates are as follows:
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Standard Retiree Rates |
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Previous Rates |
Rates Effective January 1,
2006 |
| Person eligible for Medicare |
$75.00 |
$76.00 |
| Person not eligible for Medicare |
$125.00 |
$126.00 |
4. Upon a participant’s death, enhanced options for
a surviving spouse age 60 or older
Under the Plan’s COBRA provision, your eligible Dependents, including
your surviving spouse, are allowed to purchase up to 36 months of COBRA
coverage upon your death. Effective April 1, 2005, the Fund will provide
Surviving Spouse Medical Benefits as an alternative to COBRA to your
surviving spouse under certain circumstances. This new benefit does not
apply to other Dependents who will continue to have the option of
electing COBRA coverage. Effective April 1, 2005, Section 3.03 (F) on
page 17 of the SPD booklet is deleted and a new Section 3.05 is adopted
as follows:
3.05 Eligibility For Surviving Spouse Medical Benefits Effective
April 1, 2005
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A. |
Eligibility |
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As an alternative to COBRA, your surviving
spouse may be able to purchase Surviving Spouse Medical Benefits
if each of the following conditions are met: 1) you die while
covered under the Welfare Fund as an Active or Retired Employee,
2) your surviving spouse is at least age 60 on the date you die,
and 3) your spouse is eligible to receive a surviving spouse
benefit from the Pipe Fitter’s Retirement Fund, Local 597
immediately following your death. If these conditions are met,
your spouse will have three months to make a one time election
to purchase this coverage. If the spouse declines coverage, or
fails to make timely payment for such coverage, this option
terminates and will not be offered a second time. |
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i. |
Benefits Prior to Medicare. The Surviving Spouse
Medical Benefit prior to Medicare is the same benefit provided
to dependent spouses of Retired Employees not yet eligible for
Medicare described in Section 2.02 and the Prescription and
Specialty Drug Benefit described in Section 2.04. The amount
charged will be determined from time to time by the Board of
Trustees and is expected to equal approximately 50% of the
Active Employee COBRA rate. As of April 1, 2005 the charge is
$377 per month. Effective January 1, 2006, the charge is $380
per month. |
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ii. |
Benefits After Medicare Entitlement. The
Surviving Spouse Medical Benefit after Medicare entitlement is
the same benefit provided to dependent spouses of Retired
Employees eligible for Medicare described in Section 2.03 and
the Prescription and Specialty Drug Benefit described in Section
2.04. The amount charged will be determined from time to time by
the Board of Trustees and is expected to equal approximately the
full cost of such coverage. As of April 1, 2005 the charge is
$300 per month. |
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B. |
Termination Of
Eligibility |
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A surviving spouse will
no longer be eligible to purchase the Surviving Spouse Medical
Benefits if any of the following events occur. |
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i. |
Failure to make timely payment in accordance
with the Fund Office procedures. |
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ii. |
Remarriage of the surviving spouse. |
5. Combined annual out of pocket maximum of
$5,000 for Prescription and Specialty Drugs
Previously, the Plan provided for a $5,000 out of pocket maximum for
Prescription Drugs and a separate $5,000 annual out-of-pocket maximum
for Specialty Drugs. This meant that a participant utilizing both
Prescription and Specialty Drugs may have had to pay $10,000 for these
two types of drugs. To address this issue, the Plan has been amended
effective January 1, 2005, so that the out-of pocket maximum for
Prescription and Specialty Drugs is combined for a total annual out of
pocket maximum of $5,000 for all drugs. Accordingly, Section 2.04 on
page 8 of the SPD booklet is restated to delete the separate out of
pocket maximum for Specialty Drugs and to provide for a combined out of
pocket maximum.
6. Dental cleanings/exams covered two times each
calendar year
The Plan has been amended to allow two dental cleanings/exams during
a calendar year instead of requiring six months between dental
cleanings/exams. Effective January 1, 2005, Section 10.05 Covered Dental
Expenses on page 36 of the SPD booklet is amended by restating Sections
10.05(A) and (B) as follows:
10.05 A. Two routine oral examinations per calendar year.
10.05 B. Two routine prophylaxis treatments by a Dentist or dental
hygienist per calendar year.
7. Extended COBRA coverage during military
service
For a participant entering the military, the maximum period of COBRA
coverage is increased from 18 to 24 months. This change is effective for
an election of medical benefits on or after December 10, 2004, and
fulfills the requirements under the Veterans Benefits Improvement Act of
2004.
Plan Section 3.01(J), Effect of Military Service on Eligibility, on
page 12 of the SPD booklet is amended to increase from 18 to 24 months
the maximum period of COBRA coverage applicable to Options 1 and 2.
Under Option 1, you are offered COBRA coverage upon entering the
military. Under Option 1, active Plan eligibility is suspended and you
are relying on military and/or COBRA coverage for you and your
dependents. Upon your discharge, your active Plan eligibility and
Accumulation Account are reinstated. Option 1 is the default option and
applies unless you elect Option 2
Under Option 2, you continue your active coverage under the Plan
while you are in the military. Your Plan eligibility continues for as
long as the hours in your Accumulation Account permit, after which you
are offered COBRA coverage.
You can contact the Fund Office, if you have questions on how
military service affects your eligibility.
8. Clarification of Retired Employee Eligibility
Rule
Retirees who are otherwise eligible for Retired Employee Coverage are
required to pay the applicable premium after the run-out of their
accumulation account. However, there is an exception to this rule if the
eligible spouse is receiving benefits as a result of his or her
employment. To clarify this exception, effective January 1, 2005,
Section 3.02(A) on page 14 of the SPD booklet is amended by adding the
following paragraph at the end of item 3 as follows:
If you do not pay the applicable premium, your eligibility for
Retired Employee Coverage will terminate and you will not be allowed to
re-enroll at a later date. However, there is one exception to this rule:
if your eligible spouse is receiving medical benefits as a result of
their current employment, you may defer covering your spouse under this
Fund’s retiree medical coverage until his or her employment based
coverage terminates.
9. Reimbursement of weekly disability benefits
for non-work related incidents eliminated
Under the Plan’s subrogation and reimbursement rules, the Fund is
entitled to 100% reimbursement of medical bills and weekly disability
benefits paid on an injured participant’s behalf, where the participant
subsequently receives payment from a responsible third party. However,
effective for settlements approved after August 24, 2005, Section 17.01
at page 45 is amended to provide that the Fund will no longer seek
reimbursement of weekly disability benefits in the case of a non-work
related injury. It should be noted that non-work related disabilities
will continue to count against the two-period limit during a 60 month
period, as provided in Section 6.01 at page 22 of the SPD booklet.
The rule is different for a work-related disability. For a
work-related disability, the Fund is still entitled to 100%
reimbursement of weekly disability benefits paid on an injured
participant’s behalf, where the participant subsequently receives
payment from a responsible third party. With regard to the two-period
limit for weekly disability benefits during a 60 month period, a
work-related disability will not count against this limit when the Fund
receives 100% reimbursement of medical bills and weekly disability
benefits paid on the participant’s behalf.
10. Higher Welfare Fund premiums for retirees
working in related pipe fitting employment effective January 1, 2006
The Fund provides benefits for employees who work in the pipe fitting
industry, including subsidized medical benefits for retirees.
For retirees who return to covered employment, the Fund receives
contributions under the collective bargaining agreement. The Fund does
not receive those contributions for retirees who work in the pipe
fitting industry in a job not covered by the collective bargaining
agreement. Accordingly, the Board has established a Related Employment
Premium to recover some of the benefit expense for retirees working in
related pipe fitting employment.
Under these provisions, a retiree must provide advance written notice
of such employment. Retirees currently employed in related employment
must provide advance written notice prior to the January 1, 2006
effective date. If advance notice is not provided, and the Fund learns
of such employment, the retiree will owe additional payments as
described in the example. Attached is a Notification Form for reporting
related employment.
The related employment premium has been established effective January
1, 2006 as provided in new Section 3.02 (B-1) which has been added to
the SPD booklet as follows:
3.02 B-1. Related Employment Premium For Retirees Working In
Non-Covered Employment For An Employer Engaged In The Pipe Fitting
Industry.
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A. |
Related Employment Premium |
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Effective January 1, 2006, the Related Employment Premium will
be charged to eligible retirees who perform any work for an
employer which is engaged in the Pipe Fitting Industry in the
United States (Related Employment). An employer is engaged in
the Pipe Fitting Industry if it performs contracts for or
performs work within the Pipe Fitters’ Trade Jurisdiction as
defined in the Area Agreement; Trade Jurisdiction applies to the
type of work performed regardless of whether such work is
performed within the Territorial Jurisdiction of the Local 597
Area Agreement.
If the retiree would otherwise be eligible at no charge due
to the run-out of hours in his Accumulation Account, he will
receive Active Employee Benefits and will be charged the
Standard Premium for retiree coverage while engaged in Related
Employment. After the run-out of hours in his Accumulation
Account, a retiree will receive Retired Employee Coverage and
will be charged the Related Employment Premium during any months
of Related Employment.
The amount of the Related Employment Premium depends on the
number of persons in the retiree’s family unit who are covered
and whether each covered person is eligible for Medicare. In
addition, the Related Employment Premium is capped at two
persons per family unit (e.g., retiree plus spouse and child
need pay only for two persons); where there are family units of
more than two, the rates charged will be for the retiree and the
youngest covered family member.
Effective January 1, 2006, the Related Employment Premiums
applicable to a retiree who works in Non-Covered Employment in
the Pipe Fitting Industry for any hours during a month are shown
below:
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Related Employment Premium
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Premium per person eligible for Medicare: |
$151 per month |
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Premium per person not eligible for Medicare:
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$252 per month |
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The rates of $151 and $252 have been set at 18% of the current
COBRA rate for the Medicare covered persons and 30% of the
current COBRA rate for the non-Medicare covered persons.
Whenever COBRA rates adjust in the future, these Related
Employment Premiums shall also automatically be adjusted and
shall be, respectively, 18% and 30% of the COBRA rate applicable
at any future date.
Eligibility for Retired Employee Coverage is conditioned on
the retired employee authorizing any applicable retiree
self-payment or premium to be deducted from the retired
employee’s monthly benefit received from the Pipe Fitters’
Retirement Fund Local 597.
The higher Related Employment Premium will be charged during
the period of Related Employment. A retired employee will
qualify to have the lower Standard Premium reinstated as of the
calendar month which follows the later of 1) the date the
Related Employment ceases and 2) the end of any arrearages due
because of a failure to report Related Employment.
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| B. |
Duty to Report Non-Covered
Employment in the Pipe Fitting Industry |
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As a condition of eligibility for any coverage, retirees are
required to provide the Fund Office with advance written notice
of any Related Employment. |
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| C. |
Failure to Report Related Employment
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A retiree who fails to report Related Employment, and therefore
receives coverage without paying the Related Employment Premium,
will be subject to the following provisions: |
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i. |
During the remainder of his Related
Employment, the retiree will be charged the applicable premium
as follows: 1) the Standard Premium, if the Accumulation Account
applies, or 2) the Related Employment Premium, if the
Accumulation Account does not apply. |
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ii. |
After terminating the Related
Employment, the retiree will be charged the applicable Related
Employment premium for a number of months equal to the number of
months of Related Employment he failed to properly report. The
amount of the applicable premium will be based on: 1) the
current premium rates, and 2) the type and order of coverage
(Medicare Eligible or Non-Medicare Eligible) received during the
period of unreported Related Employment. In addition, the
retiree will pay an additional Failure to Report Premium of
$100.00 per month for each month of Related Employment he failed
to report up to a maximum of $1,200.00. |
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| EXAMPLE. Ben is retired with no
dependents. He fails to report Related Employment and receives
coverage for himself without paying the applicable premium.
During his Related Employment there are three distinct types of
coverage.
The first type of coverage is for three months of Active
Employee Benefits based on his Accumulation Account during which
he should have paid the Standard Premium for a person not
eligible for Medicare ($126/mo). At the end of this first
period, he exhausts his Accumulation Account.
The second type of coverage is for four months of Retired
Employee Coverage for a person not eligible for Medicare during
which he should have paid the Related Employment Premium for a
person not eligible for Medicare ($252/mo). After the end of
this second period, he becomes eligible for Medicare.
The third type of coverage is for two months when he is
eligible for Medicare during which he should have paid the
Related Employment Premium for a person who is eligible for
Medicare ($151/mo). At the end of this third period, he
terminates his Related Employment.
After he terminates the Related Employment, he will be
charged the Related Employment Premium for nine months which is
equal to the number of months of Related Employment he failed to
properly report plus the $100.00 per month Failure to Report
Premium.
This means that during the nine months after he terminates
the Related Employment he will pay the Related Employment
Premium that corresponds to the three periods noted above plus
the $100.00 per month Failure to Report Premium. During the
first three months, he will be charged $126/mo + $100.00/mo =
$226/mo. During the next four months, he will be charged $252/mo
+100/mo = $352/mo. During the next two months, he will be
charged $151/mo +$100/mo = $251/mo. Thereafter, he will be
charged the Standard Premium for a person eligible for Medicare
($76/mo). |
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