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This section is intended to provide brief yet helpful answers to frequently asked questions about CareSave. In the event of a discrepancy between the information contained in this section and the provisions of the Plan, the official Plan Document will govern.

Basic Information
Claims
Contributing
Distributions
In-Service Withdrawal
Investments
Joining the Plan
Loans
Other Information
Refunds
Taxes and Penalties
Vesting

What is the CareSave 401(k) Retirement Savings Plan?
The CareSave 401(k) Retirement Savings Plan is the Company 401(k) Plan for employees of Caremark Rx, Inc. and is an important part of your total retirement program. Caremark Rx sponsors this Plan as a convenient way to help you accumulate savings for retirement. This Plan, along with Social Security and your personal savings, can help you prepare for your retirement years.

What is a 401(k) plan?
A 401(k) plan is an employer-sponsored savings plan which offers special tax advantages to employees who save for their retirement. It allows you to make voluntary, tax-deferred contributions up to a federally specified annual limit. Your contributions, which are made through payroll deductions, can go into various investments. The term "401(k)" refers to the section of the U.S. Internal Revenue Code that defines this special kind of savings plan.

Does the CareSave Plan include a Company matching contribution?
In addition to your contributions, the CareSave Plan also includes a Company matching contribution. Immediately after you start contributing to the plan, Caremark will match your Pre-Tax Contributions on a dollar-to-dollar basis for the first 3% of compensation you contribute to the Plan and 50¢ on every dollar for the next 2% of compensation you contribute to the Plan. For example, if you are receiving compensation of $20,000 for a plan year and you make Pre-Tax Contributions of $600 annually (3% of your compensation) to the Plan, you will receive an annual match from Caremark of $600. If you contribute $1,000 annually (5% of your compensation) to the Plan, you will receive an annual match from Caremark of $800 (3% of compensation plus .50 x 2% of compensation). The Company makes this matching contribution to your account on a per pay period basis. If you contribute more than 5% of your compensation to the Plan, the amount above 5% will still qualify as a tax deferred contribution to the Plan but you will not receive an employer match on that amount. Please note, Safe Harbor Matching Contributions will not be made on any catch up contributions you make to your account.

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How do I file a claim for retirement benefits?
Call the Principal Client Contact Center at 1-800-547-7754 when you (or your beneficiary) are ready to receive a benefit.

What if my claim is denied?
Disagreements over benefits are rare. However, if your claim for benefits is denied, in whole or in part, you will be informed in writing within 90 days (or 180 days if special circumstances are present). This denial will explain the exact reasons why the claim has been denied, including relevant Plan or contract provisions, any additional information needed to pursue the claim, and an explanation of why the information is needed. In addition, you will receive an explanation of the procedures you must follow for further review of your denied claim.

If you intend to appeal a claim that has been denied, you (or your beneficiary) must do so within 60 days after the denial. You have the right to see all material relating to your claim and submit any comments you wish. Submit your appeal to the Benefits Committee in care of the Plan Administrator, Corporate Benefits, 2211 Sanders Road, NBT-9, Northbrook, IL 60062.

Your claim will be fully and fairly reviewed by the Benefits Committee, and you will receive a decision in writing within 60 days unless an unusual situation necessitates more time to reach a decision. In that case, the Benefits Committee will send you a written notice, before the 60-day period is over, that more time is necessary. Then, the Benefits Committee has an additional 60 days, or a total of 120 days, to provide you with a written decision.

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What kind of contributions can be made to CareSave?
There are four types of contributions that can be made to your CareSave 401(k) Retirement Savings Plan:

•Employee pre-tax contributions

•Catch-up contributions

•Company matching contributions

•Rollover contributions

How much can I contribute to CareSave?
The amount you can contribute depends on the type of contribution you are making to the Plan and your investment strategy.
Employees are able to contribute up to 50% of pay on a pre-tax basis to their CareSave Plan account.

Current tax laws may further limit your total annual contributions to the Plan. For example, the limit in 2005 was $14,000, and in 2006, it was increased to $15,000.

How often can I make changes to my contribution amounts?
You can make changes as often as you'd like. Generally, if you make a change to the amount that you're contributing to the Plan, it will take effect the next payroll period or as soon as administratively possible thereafter. Please allow 2 to 3 weeks from the date of change in order for your election to take effect. Changes to your contribution amount can be made over the phone by contacting the Principal Client Contact Center at 1-800-547-7754.

Is my elected contribution automatically deducted from my paycheck?
Yes. Each pay period, your elected contribution is automatically deducted from your paycheck.

What happens if the contribution amount deducted from my paycheck is inaccurate?
You should monitor your payroll checks to be sure your CareSave deduction is accurate. If you find that your CareSave deduction is not accurate, you should contact your local Human Resources Representative immediately or contact the Principal Client Contact Center Group at 1-800-547-7754.

What are some of the tax advantages of contributing to the CareSave Plan?
Your contributions are deducted from your pay before income taxes are calculated. This simply means your taxable income will be lower. The result is that you pay less in income taxes-even though your total gross pay hasn't changed.
The earnings on your savings are also "tax-deferred." This means you will not have to pay taxes on your savings or earnings on your savings until you make withdrawals from the Plan.

What happens to my plan participation during a leave of absence?
Your participation continues during an authorized leave of absence. If the Company continues to pay you during a leave, you can continue contributing to the Plan.

Are there annual limits on contribution amounts?
Federal law limits the amount of pre-tax contributions you can make each year. These limits are reviewed by the IRS annually and could change in the future. In addition, the Plan Administrator may limit contributions made by highly compensated employees to ensure the Plan follows nondiscrimination requirements of the IRS.

What are some of the IRS limits associated with 401(k) plans?

•IRS maximum employee contribution dollar limit in 2005: $14,000

•IRS maximum employee contribution dollar limit in 2006: $15,000

•IRS maximum compensation dollar limit in 2005: $210,000

•IRS maximum compensation dollar limit in 2006: $220,000

•IRS combined employer and employee contribution limits to Plan for 2005: $42,000

•IRS combined employer and employee contribution limits to Plan for 2006: $44,000

•Highly compensated employees compensation limit for 2005: $95,000

•Highly compensated employees compensation limit for 2006: $100,000

What is the Company matching contribution?
Under the employer matching “safe harbor” formula, the Company will match your Pre-Tax Contributions on a dollar-to-dollar basis for the first 3% of compensation you contribute to the Plan and .50¢ on every dollar for the next 2% of compensation you contribute to the Plan. For example, if you are receiving compensation of $20,000 for a plan year and you make Pre-Tax Contributions of $600 annually (3% of your compensation) to the Plan, you will receive an annual match from Caremark of $600. If you contribute $1,000 annually (5% of your compensation) to the Plan, you will receive an annual match from Caremark of $800 (3% of compensation plus .50 x 2% of compensation). The Company makes this matching contribution to your account on a per pay period basis. If you contribute more than 5% of your compensation to the Plan, the amount above 5% will still qualify as a tax deferred contribution to the Plan but you will not receive an employer match on that amount. Please note, Safe Harbor Matching Contributions will not be made on any catch up contributions you make to your account. Also, Safe Harbor Matching Contributions are subject to the same withdrawal restrictions as your Pre-Tax Contributions, except they are not available for an in-service distribution in the event of a financial hardship.

When do I receive the Company matching contribution?
The match is made to your account each pay period.

Can I roll my money from another plan or rollover IRA into this Plan?
If you participated in a former employer's tax-qualified retirement plan or you have a rollover IRA, you may be able to place all or part of your account balance into the CareSave Plan. This allows you to continue to defer paying taxes on this money until you withdraw it. Generally, there are two ways to transfer this money into the CareSave Plan:
transfer the amount directly into the CareSave Plan, or receive a lump sum distribution and roll it over into the CareSave Plan within 60 days of the distribution.

What is a rollover IRA?
A rollover IRA (Individual Retirement Account) is an IRA set up to receive money from an employer-sponsored, qualified retirement plan. The money you deposit in a rollover IRA cannot be combined with other IRAs you may have.

What types of contributions cannot be rolled over into the CareSave Plan?
The IRS imposes additional rules on the types of contributions you cannot transfer or roll over into the CareSave Plan:
After-tax contributions from another qualified plan or rollover IRA may not go into the CareSave Plan.
Rollover contributions in the form of property-such as stock or promissory notes-may not go into the CareSave Plan.

When can I rollover money into the CareSave Plan?
You may roll over money into the CareSave Plan as soon as administratively possible after you begin your employment with Caremark Rx. You do not have to meet any service requirements to make a rollover contribution to the Plan. Employees hired for temporary assignment and members of collectively bargained units, unless the Plan is offered through a bargaining agreement, are not eligible to make a rollover contribution to the Plan. Your rollover contribution will be immediately invested in the fund or funds you select, and your rollover amount will be immediately eligible for a loan or withdrawal. Investment returns on rollover contributions accumulate on a pre-tax basis until you receive the money as a withdrawal or at termination of employment. If you decide to make a rollover contribution, call the Principal Client Contact Center at 1-800-547-7754 to learn more about rollovers and to request necessary forms.

Does the CareSave Plan accept after-tax contributions?
If you made after-tax contributions into any former retirement plan that Caremark Rx sponsored, or became a sponsor due to acquisition or merger, which was later merged into the CareSave Plan, your after-tax contributions will be placed in an after-tax account in the CareSave Plan. This money will receive investment return based on your investment elections. The CareSave Plan will not accept future after-tax contributions or after-tax rollover contributions.

What are catch-up contributions?
Employees age 50 and older may elect to make additional elective contributions, or catch-up contributions, to the CareSave Plan, subject to certain Internal Revenue Code restrictions. Your catch-up contributions cannot exceed the lesser of your eligible annual pay reduced by your other elective contributions or the following: $1,000 for 2002, which is then increased by $1,000 each year until contributions reach $5,000 in 2006. Thereafter, the maximum amount is indexed in $500 increments.

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How do I get my money if I leave the Company?
A distribution of the money in your account can be made for the following reasons:

•Death,

•Disability, or

•Termination of employment.

If any of these things happen, you (or your beneficiary) are entitled to receive the value of your vested account balance. When you want to receive a distribution, call the Principal Client Contact Center at 1-800-547-7754.

What happens to my account balance if I die?
If you die while you are employed at the Company, your vested account balance will be paid to your designated beneficiary or beneficiaries. If you die after you leave the Company but before your benefit payments have begun, your account will be paid to your beneficiary in a lump sum or in installments. If you die after your benefit payments have begun, your account balance will continue to be paid to your beneficiary the same way it was being paid to you.

To request a distribution when you die, your beneficiary must show proof of your death and must prove they have the right to receive your benefits.

What happens if I become disabled?
If you become disabled, you will be entitled to receive an amount equal to your account balance. Being disabled means that you cannot perform the work you were doing when the disability occurred nor any other comparable job. If your disability arises out of any of the following, you will not be considered to have a disability:

•Service in the armed forces,

•Intentionally self-inflicted injury,

•Wrongful use of narcotics, or

•Committing a felony that results in your conviction.

If you are disabled, you may have to be examined by a doctor to prove the disability exists.

What does it mean to be disabled?
To qualify as disabled, you must not be able to perform the job you had when the disability occurred nor any other comparable position.

What happens if I terminate employment?
If you leave Caremark, your account will be distributed to you upon your request as soon as administratively possible.

When I leave the Company, do I have to take my money out of the Plan?
Generally, you can terminate your employment with Caremark and leave your money in your CareSave Plan account. Call the Principal Client Contact Center at 1-800-547-7754 for more information.

However, if your account balance is less than $1,000, excluding rollover account balances, or if you are age 65 or over when you leave, it will be paid to you in a lump sum automatically. You may choose to roll over this amount into another qualified plan or rollover IRA. If you do not roll over this distribution, Caremark must withhold 20% of the distribution for taxes.

What forms of payment are available?
When you receive a distribution from your CareSave Plan account, you can have the money paid to you in a lump sum or as installments.

When will I receive the money from my accounts?
If you are entitled to take a distribution from your accounts when you die, become disabled, retire, or terminate employment, the money in your account is paid to you or your beneficiary as soon as administratively possible after the appropriate paperwork is received by The Principal Financial Group.

To receive a distribution, you or your beneficiaries must contact the Principal Client Contact Center at 1-800-547-7754.

Can my money be paid to someone else?
Yes, on the event of your death. If you are single or married, you can request that your account balances be paid to someone other than you. However, if you are married, your spouse must consent in writing to this election in front of a notary. To have your benefit paid to someone else, you need to complete a Beneficiary Designation Form. You can request a form by calling the Principal Client Contact Center at 1-800-547-7754.

Will I be subject to penalties or taxes if I take my money out of the Plan?
If you take your distribution as a lump sum, the IRS requires Caremark to withhold 20% of the amount for taxes. However, certain distributions are not subject to the 20% withholding rules. For example, if you choose to receive your account in installments, you will not be subject to the 20% withholding.

The IRS also assesses a 10% penalty on money taken out of the Plan before you reach age 59 1/2. This penalty is in addition to your regular income tax.

Can I avoid being taxed or penalized on my distribution?
You can avoid having the 20% withheld for taxes if you roll over your entire distribution into another qualified plan or rollover IRA. You simply direct the CareSave Plan Trustee to prepare a check payable to the rollover IRA or qualified plan. By using a direct transfer, you delay paying taxes on this money until you take a distribution.

Check with the Principal Client Contact Center at 1-800-547-7754 before you elect to roll over your account balance because some types of Plan contributions - after-tax money or 70 1/2 distributions - are not eligible for rollover.

You can avoid the 10% penalty on your distribution if the payment you receive is:

•Made on or after you reach age 59 1/2,

•Made after you terminate employment at or after age 55,

•Made on or after you reach age 59 1/2,because you are disabled or die,

•Made to pay certain tax-deductible medical expenses over IRS limits, or required by a Qualified Domestic Relations Order (QDRO) which relates to a divorce.

Any outstanding loan is immediately payable when you leave the Company. If you leave and have an outstanding loan, it is considered a taxable distribution - or income - if you do not repay the balance within 60 days of your termination date. If you terminate employment, you will be given more information on how to pay back any outstanding loans.

When do I begin paying taxes on my account?
If you have terminated employment, you must begin receiving a distribution from your account when you reach age 65. Any distributions are taxable as regular income.

If you are an active employee, you may begin receiving a minimum amount as a distribution from your account no later than April 1 following the year you reach age 70 1/2. You may be given an option to defer payment or receive a distribution. This distribution is considered regular income, so you will be taxed on it. Caremark will contact you during the early part of the year in which you reach age 70 1/2 to give you more information on these payments.

Can I roll my money into another plan or IRA from this Plan?
Probably,if the plan or IRA accepts rollovers. You should contact the future plan administrator to see what procedures need to be followed to accomplish a rollover from the CareSave Plan into a new plan.

Certain types of distributions, such as those required when you reach age 70 1/2 or distributions of after-tax amounts, are not eligible for rollover treatment.

If you have money in the Caremark Rx Stock Fund, you may be eligible to have the disbursement made in cash or in full shares of common stock. It is important to contact the Principal Client Contact Center at 1-800-547-7754 to determine if you qualify for a stock distribution.

Before you make arrangements for a direct rollover of your account balances, verify that the rollover IRA or new qualified plan can accept stock distributions. You may want to seek advice from a professional financial advisor before requesting a rollover.

Am I taxed on rollover transactions?
If you roll over your entire CareSave Plan account balance into another qualified plan or rollover IRA, you will not be taxed on this transfer. However, if you choose to roll over only part of the value of your account, the IRS requires Caremark to withhold 20% of the amount you receive. You may be subject to an additional 10% penalty if you receive a distribution from this Plan before you reach age 59 1/2.

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Under what circumstances can I take a withdrawal?
You can request the following types of withdrawals (depending on your years of Plan participation and types of contributions in your account):

•Age 59 ½ withdrawal

•After-tax withdrawal

•Rollover withdrawal

•Prior Company contributions withdrawal

•Hardship withdrawal

What is an Age 59 ½ Withdrawal?
When you reach age 59 ½, you can take an in-service withdrawal of the vested portion of your CareSave Plan account.

What is an After-tax Withdrawal?
You can withdraw any or all of your after-tax contributions and their earnings at any time.

What is a Rollover Withdrawal?
You can withdraw any or all of your rollover and its earnings at any time.

What is a Prior Company contribution withdrawal?
This withdrawal option is available to you if you were a former participant in the Caremark International Inc. 401 CARE Retirement Savings Plan. If you were, the amount eligible for withdrawal is your December 31, 1997 Profit Sharing account balance and earnings.

What is a Hardship Withdrawal?
Sometimes you are faced with a severe financial hardship. In these cases, you may request a withdrawal of your CareSave Plan account. This is called a hardship withdrawal. The amount you withdraw cannot be greater than your immediate financial need. To qualify for a hardship withdrawal, you must first exhaust all other withdrawal and loan options under the Plan.

Once you satisfy the requirements, there is no limit to the number of hardship withdrawals you can receive. However, only one hardship withdrawal is permitted within a 12 month period. In general, a hardship withdrawal may be made upon satisfactory proof that the withdrawal is necessary for the following reasons:

1. Payment of un-reimbursed medical expenses for you, your spouse, or your dependents.
2. Preventing foreclosure on the mortgage or eviction from your primary residence.
3. Payment of tuition, related educational fees, and room and board expenses for postsecondary education for you, your spouse, or your dependents.
4. Purchase of your primary residence (but not regular mortgage payments).
5. To pay the funeral expenses of a family member.
6. To pay expenses for repair of damage to a principal residence (in circumstances qualifying for casualty deduction under the Code without reference to the 10 percent of adjusted gross income floor).

Money available for hardship withdrawals includes your pre-tax contributions and earnings on pre-tax contributions through December 31, 1988. If you take a hardship withdrawal, you will not be allowed to make contributions to the Plan or receive any Company matching contributions for the 6 months following the date your withdrawal is processed.

If you wish to resume participation in the Plan 6 months following the date your hardship withdrawal was processed, the amount you can contribute to the Plan may be limited. You will be contacted if you are affected by this limit.

Do I pay taxes or penalties for withdrawing money?
Yes. The IRS requires 20% of a withdrawal to be withheld for taxes. The IRS also assesses a 10% penalty on the taxable part of your withdrawal if you take the money out of the Plan before you reach age 59 ½. This penalty is paid when you prepare your yearly tax return.

How do I request a withdrawal?
To request a withdrawal, contact the Principal Client Contact Center at 1-800-547-7754.

If I'm married, do I need permission from my spouse to take a withdrawal?
No, spousal consent is not required.

Do I have to repay the money if I take a withdrawal?
No. A withdrawal is considered a taxable distribution - or income - not a loan.

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Where are my contributions invested?
When you participate in the CareSave Plan, all contributions enter a trust fund that is held with The Principal Financial Group, the Plan Trustee. Under the Trustee's umbrella, the CareSave Plan offers 19 investment fund options plus Principal’s Self-Directed Brokerage Account option.

What are my investment options?
You choose how to invest the money in your account. You can invest in any combination of the CareSave Plan's investment funds as well as the Self-Directed Brokerage Account. The investment funds, also considered the Plan's "core funds", are:

•Stable Value Preferred Fund

•PIMCO Total Return Admin Fund

•Fidelity Diversified International Fund

•Principal LifeTime Strategic Income Separate Account

•Principal LifeTime 2010 Separate Account

•Principal LifeTime 2020 Separate Account

•Principal LifeTime 2030 Separate Account

•Principal LifeTime 2040 Separate Account

•Principal LifeTime 2050 Separate Account

•Oakmark Equity and Income Fund

•Dodge & Cox Stock Fund

•Large Cap Stock Index Separate Account

•Large Company Growth Separate Account

•Ariel Appreciation Fund

•Small-Cap Value II Separate Account

•Small-Cap Blend Separate Account

•Vanguard Explorer Fund

•Principal Self-Directed Brokerage Account #

•Caremark Stock Fund *

•Eli Lilly Stock Fund *

# Limited to 50% of participant’s balance

* Not open to new deposits; unitized stock funds with a cash reserve; in-kind distributions allowed

Detailed information on these funds is included in your education kit.

What is the Self-Directed Brokerage Account?
To learn more about the Self-Directed Brokerage Account, please review the following PDF documents or you may contact the Principal Client Contact Center at 1-800-547-7754 for complete information.

Can I choose how much to invest in each investment option?
To invest the money in your CareSave Plan account, you select a percentage of your total contribution, from 0% to 100%, to be invested in each fund. Your investment election percentages must be whole numbers and they must total 100%. (For example: 80% in the Dodge & Cox Stock Fund, 14% in the Ariel Appreciation Fund, and 6% in the Stable Value Preferred Fund.)

All types of contributions made to your CareSave Plan account follow your investment elections. If you do not make investment elections, the money in your account will be invested in the Stable Value Preferred Fund.

Can I change my investment elections?
You can change your investment elections daily by calling the Principal Client Contact Center at 1-800-547-7754. For example, you may call to:

•Change your investment elections for future contributions (in 1% Increments), and

•Reallocate existing balances from one fund to another (in 1% increments).

Generally, changes made by 3:00 pm Central Standard Time on any business day are effective that day and are valued as of the stock market close on the same day. Changes made after 3:00 pm Central Standard Time are effective on the next business day and are valued as of the stock market close on that business day. Changes made on holidays or weekends are effective on the next business day and are valued as of the stock market close on that business day.

How do I get additional fund information?
To obtain prospectuses, log on to www.principal.com or call the Principal Client Contact Center at 1-800-547-7754.

How should I invest my money in my CareSave Plan account?
It's up to you to develop the investment strategy that's right for you and your family. Once you develop your strategy, the CareSave Plan will help you put it into action. It offers a wide selection of funds with varying degrees of risk and potential return so you can invest in a way that helps you meet the future retirement income needs for you and your family.

What are some tips on investing?
Your investment strategy should be guided by your personal circumstances and retirement expectations. Of course, that means there are as many retirement investment strategies as there are retirement planners! Nonetheless, here are some key principles to help everyone develop a retirement strategy:

•Think about your retirement expectations. This is the foundation of all retirement planning. If you know your expectations, you can estimate what sort of retirement income you'll need to support them. In general, retirement experts say you need at least 75% of your income at retirement time to maintain your standard of living.

•Know your investment options. Typically, a retirement portfolio has investments in stocks, bonds, and money market instruments. The CareSave Plan's fund options provide opportunities to invest in all three of these basic investment vehicles. Historically, stocks have generated the highest long-term return among common investment options over time, but carry the highest short-term risk. Bonds have less short-term risk and usually generate smaller returns in the long run. Money market instruments are the least volatile short-term investment, but generally they provide the lowest return in the long run.

•Diversify. By investing the money in your account in more than one fund, you spread your risk and avoid "putting all your eggs in one basket." This reduces year-to-year fluctuations in your account, smoothing out overall investment performance.

•Avoid timing your investments to the daily ups and downs of the market. Instead, try a buy-and-hold strategy. If you're patient, you can ride out short-term fluctuations and may earn potentially higher long-term investment returns.

•Periodically review your strategy. As you approach retirement, you may consider a more conservative strategy-such as investing less in stocks and more in bonds. A simple rule of thumb from many retirement experts: Subtract your age from 100. Invest that percentage in stocks, and the rest in more conservative vehicles, such as bonds and money market instruments.

What is short-term and long-term risk?
One thing to know about the CareSave Plan's different funds is their levels of risk. Keep in mind, there are two ways to think about risk-in the short and long term.

Generally, short-term risk is the chance your investment might decline in value daily, weekly, or even quarterly. Stocks, for example, usually have higher short-term risk than bonds. In the long run, investments with higher short-term risk generally yield higher potential returns. With more time to save, you can ride out short-term risks and enjoy higher potential returns in the future.

Long-term risk is the chance that your investment might not grow enough to help you meet your financial goals for retirement. Government securities, for example, usually have higher long-term risk than stocks-their investment return may not be as great in the long term. Generally speaking, investments with higher long-term risk may have lower potential returns in the long term.

The CareSave Plan's investment funds offer a variety of short- and long-term risk levels. This allows you to select an overall investment strategy that meets your needs.

What does fund volatility mean?
Volatility means the up and down swings in investment return. The more volatile a fund's performance, the wider its up-and-down swings are over time. However, these funds can have fairly steady growth over the long run. Please remember, neither the safety of your principal nor the amount of any investment return is guaranteed. Also, it is important to understand that the past performance of any fund is not a guarantee the fund will continue to perform at the same level in the future. All investment funds have some level of risk.

What is the advantage of compounding interest?
The CareSave Plan maximizes the power of compounding interest. ("Compounding interest" simply means interest that earns more interest.) To take full advantage of this powerful, money-making feature, you should begin saving as early as possible. That way, there is more time to generate additional investment return-maximizing your final account balance at retirement time.

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Am I eligible to participate in the CareSave Plan?
Generally, you are eligible to participate in this Plan if you are:

•A regular employee on a U.S. payroll, employed by Caremark Rx, Inc. or a subsidiary, division, or facility that has adopted the Plan; and

•Not a member of a collective bargaining unit (unless participation is a part of the bargaining agreement); and

•Not a leased employee that is employed by another company that provides services to Caremark Rx, Inc.; and

•Not a temporary employee.

When am I eligible to participate in the CareSave Plan?
You are immediately eligible to participate in the CareSave Plan if you are a regular full time, part time, or per diem employee. There is no waiting period to satisfy before you can start contributing to the Plan and saving for your future!

When can I enroll in the CareSave Plan?
Since eligibility is immediate, you may enroll in the Plan at any time by contacting the Principal Client Contact Center at 1-800-547-7754.

How do I enroll in the CareSave Plan?
If you are currently not enrolled in the Plan, enrolling in the Plan is easy and can be done over the phone or by logging on to www.principal.com.

Prior to becoming initially eligible for the Plan, a Summary Plan Description (SPD) was included with your offer packet. An Education Kit will be mailed to your home generally within 30 days of your hire date.

To enroll, follow the instructions outlined here.

If you did not receive a Summary Plan Description (SPD), you may obtain one by contacting your local Human Resources representative.
If you did not receive an Education Kit, you may obtain one by contacting the Principal Client Contact Center at 1-800-547-7754.

What are the enrollment deadlines?
There are none. Your participation begins as soon as administratively possible, usually within 1 or 2 pay periods from the date you enrolled.

What type of information is available through the Principal Client Contact Center?
You may call the Principal Client Contact Center at 1-800-547-7754 to manage and get the following information about your CareSave Plan account:

•Account balance

•Contribution information (by total, by investment, by contribution type)

•Enroll/change contribution amount

•Elect catch-up contributions

•Current investment direction

•Distribution and tax information (for terminated participants)

•Outstanding loan information

•Investment performance information

•Personalized rate of return

•Investment direction changes

What is Principal Client Contact Center availability?
The toll-free, automated phone line available 24 hours a day/ 7 days a week to help you enroll in the CareSave Plan and manage your account. If you have questions, or use a rotary phone, you can speak with trained representatives from 7:00am to 9:00pm CST Monday through Friday or 8:00am to 2:00pm CST on Saturday.

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How do I apply for a loan?
If you call the Principal Client Contact Center at 1-800-547-7754, you can:

•Get loan information,

•Model loan repayment combinations, and

•Request a loan application package.

What kind of loan can I have?
You can borrow money for any reason, including the purchase of a new home. If you use the loan amount for a home, you can take up to 10 years to repay it. For all other loans, you must pay the money back within five years.

How many loans can I have outstanding?
You can have only two loans outstanding at a time.

How much can I borrow?
You can borrow money from your account as long as your vested account balance is at least $2,000. The minimum loan amount is $1,000. The maximum amount you can borrow at any given time is 50% of your vested account balance or $50,000, whichever is less.

If I'm married, do I need permission from my spouse to take a loan?
No, you can borrow money from your CareSave account without your spouse’s consent.

Do I pay interest in the loan?
Yes. When you borrow from your CareSave Plan account, you pay it back with interest to your own account. The interest makes up, in part, for the time your money was not earning investment returns in the Plan. This type of interest is not tax-deductible.

How do I pay back the loan?
You repay your loan through after-tax payroll deductions. You can prepay your loan in full at any time without a penalty. To initiate a loan payoff, contact the Principal Client Contact Center at 1-800-547-7754.

What is the interest rate on Plan loans?
The interest rate for your loan is based on the prime rate plus one full percentage point at the time you request a loan. This stays the same for the life of your loan.

How long is the loan repayment period?
You can take up to five years to pay back your loan unless you take the loan to purchase a primary residence. If you are buying your primary home, you can extend the loan repayment period for up to 10 years.

What if I take out a loan and leave the Company?
Any outstanding loan is immediately payable when you leave the Company. If you leave and have an outstanding loan, it is considered a taxable distribution - or income - if you do not repay the balance within 60 days. If you terminate employment, you will be given more information on how to pay back any outstanding loans.

What if I default on the loan?
A loan is considered in default if you have not paid off the full outstanding balance by the end of the designated repayment period or if you fail to pay any required payment within 90 days after the last day of the calendar quarter during which the payment was due. If this happens, the untaxed portion of the outstanding loan balance will be considered taxable income. If you have any money in the CareSave Plan eligible for distribution, this money will automatically be taken from your account to cover the outstanding balance of the loan.

What happens to my loan if I go on a leave of absence?
For further information on loan repayment procedures while on leave of absence, contact the Principal Client Contact Center at 1-800-547-7754.

How are loans withdrawn from my investments?
When you request a loan, a prorated amount is taken from each investment fund and from each kind of contribution you have. This means that if you have an equal account balance in four investment funds, 25% of the loan amount will be taken from each investment fund. Otherwise, the amount is prorated based on the balance in each fund.

Will I be subject to penalties or taxes if I take a loan from the Plan?
You will not be subject to penalties or taxes if you take a loan unless you do not pay it back. If you leave the Company without paying back your loan, it will be considered a taxable distribution. You may wish to consult your personal tax advisor regarding more information on tax treatment of distributions.

Is there a fee for processing loans?
Yes. Currently, there is a $75.00 loan origination fee for each loan.

What happens if loan payment deductions from my payroll check are not correct?
It is your responsibility to pay back your loan. The Company assists you in this responsibility by enabling you to have your loan payments deducted from your payroll check. You need to monitor your payroll checks to be sure that your loan payments are withheld for each pay period under the terms of your loan and that the loan payment amounts are correct. If they are not, you should contact your local Human Resources Representative immediately. If the correct loan payments are not received by the Plan, your loan could potentially go into a default status and the outstanding balance will be treated as a taxable distribution to you. A loan that has been defaulted cannot be reversed.

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Does Caremark guarantee this Plan and its related Trust from loss?
In no way does Caremark guarantee this Plan and its related Trust from loss. Caremark does not guarantee the payment of any benefits that may become due to any person under the Plan and Trust. Nothing in the Plan or Trust will be deemed to give any participant, former participant, spouse, or beneficiary an interest in any specific Trust assets or any other interest, except the right to receive benefits according to the provisions of the Plan and Trust.

Can the Company terminate the Plan?
The Company reserves the right to terminate, suspend, or amend the Plan at any time, in whole or in part. Should this happen, the account balance you have earned will be preserved, and you will be notified. Any amendment or termination of the Plan must be done by a resolution of the Board of Directors or persons authorized by the Board.

Who can I call if I have questions?
To get more information on the CareSave Plan, call the Principal Client Contact Center at 1-800-547-7754.

What legal rights do I have as a participant in the Plan?
As a participant in the CareSave 401(k) Retirement Savings Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants shall be entitled to:

•Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites and union halls, all Plan documents, including insurance contracts, collective bargaining agreements and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions.

•Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for the copies.

•Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of the summary annual report.

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.

No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. If your claim for a pension benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan Administrator review and reconsider your claim.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan Administrator and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator.

If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Who pays for plan expenses?
Assets of the Plan are held in a Trust. Once a contribution is made to your account, the money is placed in the trust where it is invested by the Trustee based on your investment election. All allowable fees to maintain the Plan are paid by the Trust. Generally, participants share the administrative expenses, except for those expenses that apply to an individual participant's account, for example, loan fees.

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Under what circumstances will I receive a refund from the Plan?
You may receive a refund if you exceed the contribution limits set by the IRS. You may also receive a refund due to IRS plan testing. The IRS sets guidelines to make sure employees at all income levels share the tax advantages of this Plan. The IRS states that the pre-tax contributions made by highly compensated employees (as a percentage of their compensation) cannot be substantially more than the pre-tax contributions made by all other eligible employees (as compared to their compensation). The same analysis is done of the Company matching contributions. This is called nondiscrimination testing.

If the Plan does not meet the IRS guidelines, certain employees may have their contributions reduced for the remainder of the year or may receive a refund of their pre-tax and Company matching contributions. This refund is considered taxable income and you will owe income taxes on this amount.

Am I taxed on refunds?
Yes. Any money refunded to you is considered taxable because it was not taxed when you made the contributions to the Plan.\

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What are the tax penalties that apply to contributions, loans, withdrawals, and distributions?
Different tax rules and penalties apply to contributions, loans, withdrawals, and distributions. Each situation is unique. Therefore, it is very important to examine the tax rules or penalties applicable before making any transaction with your CareSave Plan account. You may want to consult a tax advisor about how these rules affect your personal financial situation.

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What is "vesting"?
Vesting" refers to your ownership of the money in the CareSave 401(k) Retirement Savings Plan. Being fully vested in your CareSave Plan account means you have permanent ownership rights to the money in your account.

Am I fully vested?
Once you meet eligibility requirements and begin participating in the Plan, you are generally 100% vested in your entire CareSave Plan account balance. That means you have full ownership rights to your pre-tax contributions, Company matching contributions, and rollover contributions-plus the investments earnings on any of these contributions. In addition, you are always 100% vested in the after-tax contributions from former plans that have merged with the CareSave Plan.

First published October 10, 2006
Last updated October 11, 2006
Copyright © 2006 Caremark Inc.

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