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Retirees Lobby to Preserve Benefit Levels

November 16, 2005
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Some of Ed Beltram’s retired colleagues are seeking employment not because they miss going into an office each day, but because someday they might want to go to a doctor’s office.

Beltram, who was a human resources manager at Lucent Technologies for 28 of his 31 years with the telecommunications company, says that some Lucent retirees have seen their monthly health care premiums rise from $42 per month in 2001 to $516 per month and a projected $690 next year.

In January, the company stopped subsidizing medical coverage for dependents of management retirees who retired after March 1, 1990, and made more than $65,000.

Although premiums will rise again next year, the company asserts that increases for most retirees will be modest. Lucent says it refunded $14 million in health care premiums this year because costs for 2005 were lower than projected.

"Many people are going to work to pay for their health care benefits," says Beltram, who is a leader of the Lucent Retirees Organization. One of his friends got a job as a teller at a bank, while another became an accountant for a small company.

The situation is causing Beltram and other members of the National Retiree Legislative Network to turn to Washington. Shortly after General Motors announced a tentative deal with the United Auto Workers last month to slash health benefits by $3 billion, much of it by cutting retiree benefits, the group was on Capitol Hill.

"We’re trying to drive home to Congress that these aren’t what some might consider liberal benefits," Beltram says. "They’re actually deferred benefits that were earned through decades of service to companies. Right now, there is nothing … that prevents companies from breaking those promises."

A bill that would prohibit group health plans from cutting retiree health benefits after employees have retired has been introduced for the third time by Rep. John Tierney, D-Massachusetts. It has 53 co-sponsors, nine of whom signed on after GM’s announcement.

The bill has support only from Democrats, and no hearing has been scheduled. Republicans who control the House Education and the Workforce Committee typically are wary of legislation that imposes mandates on employers.

Since 1993, the number of companies with 500 or more employees offering health coverage to pre-Medicare-eligible retirees has dropped from 46 percent to 28 percent, while Medicare-eligible coverage declined from 40 percent to 20 percent, according to a study by Mercer Human Resource Consulting.

"Even at the companies that are maintaining the benefit, retirees are paying more for that coverage," says Derek Guyton, a Mercer health care principal. "Retirees are going to have to start thinking about saving money to pay for health benefits."

Providing retiree health coverage is becoming difficult for Lucent, which has had to spin off businesses and shed employees over the last several years.

"None of these decisions come easy," says Mary Ward, a Lucent spokeswoman. "We’re going to do whatever we can to balance the needs of retirees with the company’s ability to pay and remain competitive in a dynamic and challenging market."

Mark Schoeff Jr.

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