A. Our healthcare cost rise every year, but over the past two years they have increased dramatically. Last year the company absorbed over $6 million in increases. The prospect of even larger increases in 2002, coupled with ongoing operating loses, requires us to share a portion of the costs with you, the users of the services.

A. Our in-house benefits professionals at ABX and AFC work together with the Finance Department and outside benefit consultants to develop the best benefit options. Recommendations are presented to senior management for final decisions.

1. Like most large employers, Airborne is "self insured" for health insurance. This means that the Company contracts with United Health Care for claims management services, but the Company pays the actual claims. This is the most economical approach for large groups. The rates are therefore determined by 3 factors:

1. The cost of medical services, including prescriptions.
2. The discounts which United Healthcare is able to negotiate with doctors, hospitals, and pharmacies, and pass on to us.
3. The way we, as employees, use our healthcare benefits.

A. Yes, if costs were to trend downwards then contribution and benefits levels would likewise be reconsidered. However, the reality of the health care situation is this – we don’t anticipate health care costs will decline in the foreseeable future. The health industry experts are predicting double-digit percentage growth in health care costs every year over the next five years.

A. Yes, starting in 2002, you can insure the entire family under one plan, or you could have two employees under different plans. However, you cannot "double cover" under both plans.

A. That will depend on your circumstances. We will be providing more detailed information in the Open Enrollment package on the coverage so that every employee can pick the plan that is best for them. The Open Enrollment package will be distributed to employee during the first week of November.

A. Yes, the co-payments are increasing. However, remember that you receive 3 months supply for the price of 2 months when using the mail order program. Mail order can help save you and the company money.

A. Healthcare cost sharing will be determined as part of the current negotiation process.

A. Although cost increases have been experienced in both the dental and vision programs, there are no changes to the dental options or the vision benefit. If you elect the Enhanced PPO for your medical coverage, you will be covered by the Enhanced Dental plan (includes orthodontia) and the vision benefit. If you elect the Basic PPO you will be covered by the Traditional Dental plan (no orthodontia) and the vision benefit.

A. The total increase is projected to be $14.5 million for 2002. Airborne will be paying $8 million (or more) of the increase with employees sharing with $6.5 million of the increase.

A. The employee contribution has not increased since 1993 for the core medical plan offered to employees. During this time the actual cost of the medical plan has more than doubled. The company has paid for all of the cost increases for the past 9 years.

A. Yes, we regularly solicit bids for our health insurance. As a large employer with locations all over the country, there are only a few insurance companies that can provide the coast-to-coast provider network that we require. United Health Care has the widest national network of any of the major insurance carriers. Don’t forget that we are self-insured. The great majority of your healthcare dollars go to pay doctors, hospitals, and pharmacies, not to United Health Care. They only receive a relatively small processing fee.

A. The most effective tool we have in controlling these costs is how we use our healthcare benefits. Use generic drugs when they are available. See your family doctor for non-emergency care or an urgent care facility rather than the emergency room. Don’t just ask for a medication

because you saw it advertised for your symptoms. Instead, discuss with your physician the appropriate prescription medication for your condition and make an informed decision with your doctor’s medical knowledge and experience.

Q14. What is causing the increases?

A. The increases are being driven by a number of reasons including use of expensive treatment options such as the emergency room for non emergencies, escalating cost increases for prescription drugs, use of non-network providers, and new and expensive medical technologies.

A. There are maximum annual out-of-pocket limits for both the Enhanced PPO and the Basic PPO plans. Office visits, emergency room visits, urgent care visits and prescription drug co-payments are not counted towards the out-of-pocket maximums.

A. If you are currently enrolled in the Enhanced PPO plan and do not want to make any changes, then you do not need to complete an enrollment form.

A. The Company has commissioned a feasibility study about the possibility of opening a Family Medical Center or an Urgent Care Center for ABX employees and their families at the Airborne Air Park in Wilmington. This facility would be designed to improve access for employees and family members to primary care physicians while helping to save money for both employees and their families and the Company. If such a facility is approved, ABX would contract with an outside health care organization to run the facility for us. No decision has been made to proceed with this project at this time.

Q18. Do we know what other companies are doing?

A. According to a recent USA Today article (August 27, 2001), many employers across the country are experiencing significant health care cost increases and are sharing more of these cost with employees. A recent benefit survey conducted by the benefits consulting firm William M. Mercer, indicated that the average employee at large employers pays $48 per month for single coverage and $184 per month for family coverage.

Q19. If I am currently enrolled in the Traditional Plan, what do I do?

A. You must complete a new enrollment form indicating a new election for 2002. You may choose between the Enhanced PPO plan, the Basic PPO plan or decline coverage altogether (including dental and vision benefits). If you fail to return a new enrollment form your coverage will be enrolled in the Basic PPO plan with single coverage.

A. No

A. Open enrollment is your opportunity each year to make adjustments to your health care plan. All changes are effective on January 1^st. During the rest of the year, you cannot make changes to your health benefit elections except for certain Family and Work Status changes including:

Any of these reasons allows you to make a change mid-year provide you notify the Benefits Department within 30 days of the event (60 days for birth).

A. Open enrollment materials will be distributed to employees during the first week of November. An Open Enrollment Information Center has been created on the ABX benefits web site and will be updated with more information. The web address is www.abxair.com/benefits. Additionally, benefits personnel will be available during open enrollment to answer questions. Dates, times and locations will be announced. You can e-mail questions to abx.benefits@airborne.com.

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Revised: January 14, 2005.