YOUR VERIZON PRESCRIPTION DRUG BENEFIT

In February 2011, we sent you a letter informing you that Verizon will sponsor a group Medicare Part D plan and that Medicare-eligible retirees and family members will receive their prescription drug coverage through this program beginning in 2013. This Overview Guide provides background on the new program and outlines what you can expect.

Like many large employers, Verizon has been receiving a Retiree Drug Subsidy (RDS) from Medicare to offset some of the cost of providing prescription drug benefits to Medicare-eligible retirees and dependents. Due to healthcare reform provisions that take effect in 2013, the RDS that Verizon and other companies receive from Medicare will no longer be tax-effective. Additionally, these healthcare reform changes make it more cost-effective to provide a prescription drug benefit for Medicare- eligible participants directly through the Medicare Part D program. As a result, the Verizon prescription drug program will be eligible for subsidies from Medicare and additional discounts from pharmaceutical manufacturers beginning in 2013. These subsidies and discounts will help offset the company’s cost of providing prescription drug coverage for retirees, making the program more cost effective and sustainable.

In general, the Verizon prescription drug program required only small changes to comply with Medicare regulations. Medco, now known as “Express Scripts” due to a recent merger, will continue to be your prescription drug benefit manager.

These changes are mainly administrative in nature, and we’ve taken proactive measures to ensure minimal impact to our retirees. Most of the impact relates to how your benefit is administered “behind-the-scenes” among Verizon, Express Scripts and the Medicare Part D program.

Please hang onto this booklet to reference as you continue to receive additional information throughout the fall.

Sincerely,

Donna C. ChiffrillerVice President, Benefits

What’s InsideYou are receiving this communication to help you prepare for administrative changes to your prescription drug program beginning on January 1, 2013.

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Your Verizon Prescription Drug Benefit 3What Will You Experience? 3

What You Can Expect 4Features Available Through Medicare Part D 5 More Communications Coming Your Way 5

What You Will Receive in the Mail 6Keep an Eye Out for Mail from Express Scripts 6

When to Expect More Communication 7What You Need to Do 7

Communication Timeline 8What’s Next 9

Questions and Answers 10

For More Information 12

TABLE OF CONTENTS

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Beginning in 2013, Verizon will convert your current prescription drug program into a Verizon-sponsored group-based Medicare Part D plan.

Because your current prescription drug benefits are more comprehensive than the standard Medicare Part D program, Verizon has designed a supplemental “wrap-around” plan.

What Will You Experience?Beginning in 2013, you will automatically transition to both the Medicare Part D and the supplemental “wrap-around” plans directly through a group enrollment program. The “wrap-around” benefit will help to reduce disruption to the delivery of the prescription drug benefit you experience today. In communications you will receive moving forward, these two components will together be referred to as “Express Scripts Medicare™ (PDP) for Verizon” or just “Express Scripts Medicare.”

YOUR VERIZON PRESCRIPTION DRUG BENEFIT

While the transition will be administrative in nature, we want to keep you informed so you know what you can expect during the upcoming enrollment period from November 7 through November 21, 2012, and when the benefits take effect on January 1, 2013.

No “Donut Hole”You will not be exposed to features you may have heard about in the media related to Medicare Part D program cost-sharing, including the Medicare Part D Coverage Gap, or “Donut Hole.”

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Because the enrollment process will be coordinated on your behalf, you will not have to take action prior to the new plan year, but you should be aware of the steps happening behind the scenes:

1. You will be automatically enrolled: If you are currently enrolled in a Verizon medical plan option that provides prescription drug coverage through Express Scripts (formerly Medco), you will be automatically enrolled in Express Scripts Medicare, which goes into effect on January 1, 2013.

You and your Medicare-eligible dependents will not need to fill out Medicare Part D enrollment forms, interact with the Medicare program, or take any other action to activate the Medicare Part D coordination with your Verizon sponsored plan. Verizon and Express Scripts Medicare will work together to enroll all Medicare-eligible participants on a group basis so this transition will be seamless for you and your family members.

If you are currently already enrolled in another Medicare Part D plan outside of Verizon, please see the Questions and Answers section in this guide for important information.

2. You will receive additional communications: 2013 Annual Enrollment for Verizon health care benefits is from November 7 through November 21, 2012.1 Your Medicare Part D enrollment will be processed during this period. Prior to enrollment, you will receive additional information about your benefit from Express Scripts Medicare. See page 8 for a detailed timeline.

3. You will receive a new Member ID card once successfully enrolled: In December, you and any Medicare-eligible dependent(s) will each receive a new prescription drug benefit Member ID card from Express Scripts Medicare that can be used beginning in 2013 once your enrollment in the Express Scripts Medicare prescription drug plan is confirmed by Medicare.

4. You can begin using your benefit on January 1, 2013: You can use your prescription drug benefits through Express Scripts Medicare in the same way you have in the past.

• At Retail Pharmacies: Begin showing your new Member ID card that you will receive in the Welcome Kit from Express Scripts Medicare. Your existing prescriptions with refills available will automatically transfer.

• Through Mail-Order Pharmacy: Begin using the new mail order form you’ll receive in the Welcome Kit from Express Scripts Medicare. Your existing prescriptions with refills available will automatically transfer.

WHAT YOU CAN EXPECT

1 This enrollment period is different from the Medicare annual coordinated election period that applies to Medicare Part D plans for individuals without group coverage.

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Features Available Through Medicare Part DHere are some of the key benefit features that will be available beginning in 2013. You’ll receive more information from Express Scripts Medicare on how these features work and if they apply to you.

• 90-Day Medication Supply at Retail: Participants will be eligible for a 90-day prescription drug supply at all in-network retail pharmacies.

• Reduced Cost-Sharing for Participants with Significant Claims: Participants who reach $6,733.75 in total gross prescription drug costs in 2013 may qualify for a supplemental benefit during the year. Payment will be adjusted directly at the pharmacy, if applicable.

• Medication Therapy Management (MTM) Program: Resources will be available to support participants who take multiple medications, have chronic conditions, or experience high drug costs.

• “Extra Help” for Low-Income Participants: Medicare Part D provides additional prescription drug benefits to those who qualify as low income by the government. If you are one of the few participants who automatically qualify, you will receive additional communication. For more information on “Extra Help,” please visit the Social Security Administration website at http://www.ssa.gov.

More Communications Coming Your WayDue to federal requirements, you will be receiving many more communications associated with your new prescription drug program from Verizon and Express Scripts than you have in the past, both before and after enrollment. In order to help you understand and prepare for these new communications, be sure to review the communication timeline in this guide.

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The government requires that Verizon and Express Scripts Medicare send a variety of communications both prior to and following enrollment to notify members of their Medicare Part D benefi ts, administrative requirements, key procedures and other issues.

• Many of these communications are government-required standard notices that Verizon and Express Scripts Medicare must provide as part of participating in Medicare Part D.

• One of the primary reasons we are providing you with a preview in this guide is that the standard government notices contain language that applies to multiple plan sponsor and participant situations and potentially may be confusing.

• Some of these communications will be targeted to individual retirees with specifi c situations and will require action, which will be clearly explained in the communication itself. Several of these situations are highlighted in the Questions and Answers section of this guide.

• Finally, the government requires that we send these communications individually to each participant enrolled in the program. This means that both you and any Medicare-eligible dependent(s) will be receiving these communications individually for the new program.

Keep an Eye Out for Mail from Express Scripts Here is an example of what upcoming communications will look like. Mailings from Express Scripts Medicare will have a return address of Express Scripts or Express Scripts Medicare, and most will feature the Express Scripts Medicare logo along with the Verizon logo:

WHAT YOU WILL RECEIVE IN THE MAIL

Be on the lookout for mail from Express Scripts Medicare and Verizon

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The following short checklist is a handy reference for what you will want to do once the communications begin in November:

You and your Medicare-eligible dependent(s) will individually receive a series of communications directly from Express Scripts Medicare. For most participants, these will simply provide background on the new plan and reminders for how to access and use the prescription drug benefit.

The timeline on the next two pages is designed to assist you in understanding what you will be receiving and when.

If you have any questions about any of the communications you receive or any action required, please call Express Scripts Customer Service at 1-877-877-1878 and choose Option 1. Customer Service is available in English and other languages, 24 hours a day, seven days a week. TTY users should call 1-800-716-3231.

WHEN TO EXPECT MORE COMMUNICATION

What You Need to Do

□ Review the Prescription Drug Benefit at a Glance (a yellow summary sheet) to be sent with the next mailing “A Preview of Your Verizon Prescription Drug Benefit” to understand the basics of your prescription drug plan.

□ If you would like to change your Verizon- sponsored prescription drug coverage for 2013, you will need to take action between November 7 and November 21, 2012. If you do not take action, you will be group enrolled at the coverage level for which you are currently enrolled in 2012.

□ You will be notified by mail if Express Scripts Medicare has any issues with your enrollment.

□ Look out for your Express Scripts Medicare Member ID card to arrive in December. If you do not receive your Member ID card in time for the new plan year, contact Express Scripts Customer Service at

1-877-877-1878 and choose Option 1.

Customer Service is available in English and other languages, 24 hours a day, seven days a week. TTY users should call 1-800-716-3231.

This denotes communications that may require you and/or your Medicare-eligible dependents to take action.

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1. Preview of Your Verizon Prescription Drug Benefit

This government-required mailing (see snapshot on page 6) informs participants of their automatic enrollment into Express Scripts Medicare and previews what’s ahead. It includes:

• A cover letter with instructions concerning how to opt out of the Verizon program, if desired, as well as general information.

• A Prescription Drug Benefit at a Glance, which shows your share of the final cost.

• CMS-Required Prescription Drug Information that outlines your primary prescription drug benefit through the Medicare Part D program as required by the Centers for Medicare & Medicaid Services (CMS).

2. Various Enrollment Notices and Forms

These are government-required correspondences that are sent to participants by Express Scripts Medicare when needed based on individual participant facts and circumstances concerning the enrollment process and ongoing program administration. We expect relatively few participants will receive these.

If received, please review these mailings carefully and follow the instructions provided. Please call Express Scripts Customer Service directly at 1-877-877-1878 (choose Option 1) if you have any questions about these mailings or the specific actions you are required to take.

NOVEMBER ANNUAL ENROLLMENT PERIOD November 7–November 21, 2012

COMMUNICATION TIMELINE

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3. Welcome Kit with New Member ID Card

This package from Express Scripts Medicare confi rms your successful enrollment and includes a variety of both general information and important plan materials you will need throughout the plan year, including:

• New Member ID Card• Prescription Drug Benefi t at a Glance • Formulary (List of Covered Drugs)• Retail Pharmacy Network Directory• Mail Order Forms• Other Helpful Information

Please review your new Member ID card and accompanying information to make sure the information is correct. You should begin using your new Member ID card on January 1, 2013.

DECEMBER JANUARY FEBRUARY MARCH

4. Plan Administration Lett ers

These government-required communications are sent at the beginning of and throughout the plan year to specifi c participants who are impacted by situations such as:

• Transition Supply: Express Scripts Medicare requires limitations on certain medications. If the medication you are currently taking is subject to one of these limitations, you may receive a lett er indicating that you are eligible for a “transition supply” of a medication following your next refi ll at your pharmacy. You will be eligible for up to a one-month supply of the medication while you and Express Scripts Medicare coordinate with your prescribing physician.

• New Administrative Procedures for Drugs that May Qualify under Medicare Part B or D: If you are currently taking one of the few medications that may be covered by both Medicare Part B and Medicare Part D, Express Scripts Medicare will inform you in advance and collect information from your prescribing physician to understand whether to submit these claims to Medicare Part B or Part D.

ANNUAL ENROLLMENT PERIOD November 7–November 21, 2012 What’s NextStay tuned for more information to come from Verizon and Express Scripts Medicare. As shown on the timeline, you will be receiving more communications in the next few weeks from Express Scripts Medicare that explain how your prescription drug benefi t will work.

This denotes communications that may require you and/or your Medicare-eligible dependents to take action.

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The following questions and answers provide additional details that may apply to some retirees.

Is there a separate cost associated with the Verizon Prescription Drug Benefit?No. You will not pay a Medicare Part D premium directly to CMS. Instead, the cost of your Verizon Medicare Part D coverage, including the supplemental wrap-around plan, will be incorporated into your overall cost of Verizon medical and prescription drug coverage.

Verizon subsidizes coverage for most plan participants. If you receive a subsidy towards your premium from Verizon, the amount that you pay for coverage will not be impacted by the move to Medicare Part D. However, in all cases, under Medicare rules, Verizon will ensure that the amount that you pay for coverage will never exceed the cost of the basic Medicare Part D benefit plus the cost of any non-Medicare Part D benefits, reflecting federal subsidies. Also, as mentioned earlier, for some participants, your benefit may be additionally subsidized if you meet the requirements for a low-income subsidy from Medicare (i.e., “Extra Help”). In contrast, for individuals with modified adjusted gross income above certain

thresholds (e.g., $85,000/$170,000 for single/joint tax filers), Medicare will require that you pay a portion of your Medicare Part D plan cost through a deduction from your Social Security check.

Can I still fill my prescription at my current pharmacy? Yes. As mentioned earlier, you will begin using your new Member ID card on January 1 at retail pharmacies to fill prescriptions as you have in the past. Approximately ninety- nine percent of retail pharmacies used today are also providers in the Medicare Part D program. Express Scripts Medicare will notify any impacted participants whose pharmacies do not participate in the Medicare Part D program and ask them to choose from alternatives listed in the Express Scripts Medicare’s Retail Pharmacy Directory.

QUESTIONS AND ANSWERS

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Will I need to change health care providers? No. Most providers are eligible to participate in Medicare Part D. If you or your dependent has used one of the small number of providers who are not eligible to participate in Medicare Part D, you will be notified in advance by Express Scripts Medicare so you can consider another provider.

Can I opt out of the Verizon Prescription Drug Benefit?Yes. You can opt out of the Verizon Prescription Drug Benefit. You will receive more information on how to do this in the next mailing, “A Preview of Your Verizon Prescription Drug Benefit.” If you decide to opt out of Verizon’s new prescription drug coverage, you will also forfeit your current Verizon-sponsored medical coverage for you and any family members. Verizon’s plans do not allow for separate election for medical versus prescription drug coverage.

A small number of Medicare-eligible participants are currently enrolled in both the Verizon-sponsored prescription drug program and individual Medicare Part D plans or individual Medicare Advantage plans with Medicare Part D benefits.

Medicare allows a participant to be enrolled in only one Medicare Part D plan at a time. If you are currently enrolled in another Medicare Part D plan, you will be disenrolled automatically from that plan upon enrollment in the Verizon prescription drug program.

There may be good reasons for you to retain your other Medicare Part D coverage and opt out of the new Verizon prescription drug program, but you will need to determine the most appropriate coverage for your situation. If you would like to retain your other Medicare Part D coverage, you will need to opt out of the Verizon medical and prescription drug program. You will receive instructions on how to do this in the next mailing from Verizon and Express Scripts Medicare, “A Preview of Your Verizon Prescription Drug Benefit.”

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FOR MORE INFORMATION

If you have any questions about any of the communications you receive or any action required, please call Express Scripts Customer Service at 1-877-877-1878 and choose Option 1.

Customer Service is available in English and other languages, 24 hours a day, seven days a week. TTY users should call 1-800-716-3231.

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This document is prepared for Verizon retirees and their eligible dependents who are currently Medicare-eligible and participating in a Verizon Prescription Drug Benefit administered by Express Scripts (formerly Medco).

While not intended to replace the terms of the Verizon benefit plans or official plan documents for those plans, it is intended to update information related to your retiree prescription drug benefit, as explained in your summary plan description (SPD) and is considered a summary of material modification. As explained in your SPD, Verizon reserves the right to amend, modify, suspend or terminate its group health plans at any time, at its discretion, with or without advance notice to participants, subject to any duty to bargain collectively. As always, the Verizon Employee Benefits Committee (VEBC), the Chairperson of the VEBC, or such delegate of the VEBC, as outlined by the applicable Verizon group health plan, has full discretionary authority to interpret such plan and determine eligibility for benefits in accordance with its terms and the provisions of ERISA.

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