Chrysler Group Announces Innovative Changes to Employee Health Care Plans
15 Mars 2006 - 11:00PM
PR Newswire (US)
Future employee health premium-sharing scaled to salary AUBURN
HILLS, Mich., March 15 /PRNewswire-FirstCall/ -- Chrysler Group
today announced changes to the health care programs it offers to
active and retired professional-administrative, management and
executive employees, effective Jan. 1, 2007. Most notably, the new
plan will introduce a health care premium-sharing structure for
non-bargaining salaried employees that is based on salary levels.
"We all have to do our part going forward," said Chrysler Group
President and Chief Executive Officer Tom LaSorda. "And we have to
do it in a way that is innovative, competitive, equitable and
provides a long-term solution. Our solution addresses the need to
be competitive and recognizes that, while employees need to pay
more for their health care, cost increases should be borne
equitably, based on an employee's ability to pay." Under the new
health care program, each active salaried employee's health care
pre-tax premium increases will be based on their rank and base
salary level. For 2007, that means professional-administrative
employee premiums on average will not be affected, while the top of
the executive ranks will be responsible for up to 100 percent of
their health care premium. Mid-managers will see an average premium
increase of about $450 in 2007, while the average executive will
additionally contribute around $1,500. Future incremental pre-tax
premium increases will follow this pattern of "the more you make,
the more you will be asked to contribute," and any future
percentage increases will be reviewed on an annual basis to reflect
health care and wage economics. Health care is one of the company's
largest fixed costs -- expected to be $2.3 billion in 2006 -- and
continues to rise each year well beyond inflation. Since 2000,
Chrysler Group's health care costs have risen 100 percent.
"Chrysler Group must continue to drive down health care costs in
order to sustain our profitable growth in a market that is
intensely competitive," added LaSorda. "The market will not allow
car makers to raise vehicle prices to absorb these additional
expenses. Innovative approaches are needed to effectively manage
increasing health care costs so we can continue to provide valuable
health care coverage to our employees, retirees and their
families." Today, the average annual total health care cost for
each salaried Chrysler Group employee, regardless of job or income
level, is about $11,000. Of that total, the average salaried
employee, again regardless of rank or income, pays about 27 percent
of that cost, or roughly $3,000 per year in pre-tax premiums,
co-pays and deductibles to their service provider. On average, that
means Chrysler Group is spending about $8,000 per salaried employee
for health care. The net effect of the changes will increase on
average by four percent the amount of health care costs borne by
the salaried employees -- rising from 27 percent to 31. Chrysler
Group today also announced changes to health care benefits for pre-
and post-age 65 retirees. Pre-65 Retirees Currently, the company
and the "early" retirees equally share annual health care premium
increases. In keeping with an approach that is equitable across
groups, beginning Jan. 1, 2007, current and future pre-Medicare
retirees (pre-65) will now share a percentage of health care
premium increases based on the exit base salary of the retiree.
Those retirees who exited at an income below $50,000 will share 50
percent of the inflationary premium in subsequent years, while
employees who exited at an income of $171,000 or higher will pay
100 percent of the inflationary premium. For 2007, that means an
incremental annual premium of $0 for the former and approximately
$375 for the latter. Those pre-65 retirees exiting between those
salary amounts will pay more than 50 and less than 100 percent on
an increasing scale based on exit salary. Post-65 Retirees For
Medicare-eligible post-age 65 retirees, the Company is establishing
a Health Care Retirement Account (HRA) of $1,750 annually for a
retiree and an additional $1,750 for a spouse or domestic partner,
assuming retirement with 100 percent of the necessary service-year
credits. In 2008, the reimbursement will increase by 3 percent for
the retiree or surviving spouse. Under the new plan, the retiree
will be in the driver's seat to choose what coverage they require
and may use the HRA funds toward any or all of the following
reimbursable health care expenses: * Medicare Part B or primary
medical insurance (currently $1,050 per person) * Medicare Part D
(cost depends on prescription plan based on individual need) *
Medigap Policy * Out-of-pocket expenses * Dental/vision coverage at
competitive rates Salaried employees hired after Jan. 1, 2004, will
continue to receive an annual Retiree Health Care Account deposit.
No changes are currently planned. DATASOURCE: Chrysler Group
CONTACT: Jason Vines, +1-248-512-3164, , or David Elshoff,
+1-248-512-2690, , both of Chrysler Group Web site:
http://www.media.daimlerchrysler.com/
http://www.daimlerchrysler.com/
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