Revamps Health Benefits
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
Wednesday, March 15, 2006
Chrysler Group announced Wednesday changes to its
health-care program for salaried employees that will
increase their premium payments based on rank and pay level.
The U.S. arm of DaimlerChrysler AG said under the plan,
which goes into effect next year, executives on average will
have to contribute an additional $1,500 toward their
premiums in 2007.
The auto makers said "mid-managers" would see their average
premium increase about $450, while the "top of the executive
ranks" would be responsible for up to 100% of their
Auburn Hills, Mich.-based Chrysler reported a profit of $1.8
billion in 2005 in the U.S., up 6% from the year before.
But the company's leadership had said the division faced
increasing costs and competition and it would seek benefit
cuts from workers.
"We all have to do our part going forward," Chrysler
President and Chief Executive Officer Tom LaSorda said in a
prepared statement. "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."
The changes will affect 14,900 active white-collar workers,
as well as 17,600 retirees
The company said the changes will mean salaried employees
bear 31% of their health-care costs, up from 27%. Chrysler
said the average cost for each salaried employee is about
$11,000, including pretax premiums, co-pays and deductibles.
For those retiring before the age of 65, their portion of
future health-care premium increases will be based on the
exit base salary of the retiree, with some responsible for
up to 100% of the increase. Currently, the company and the
"early" retirees equally share premium increases.
For retirees 65 and older, the company will create
health-care retirement accounts of $1,750 a year for each
retiree and an identical amount for their spouse. Retirees
will be able to use the money for programs such as Medicare
costs, dental and vision coverage and out-of-pocket
Chrysler spent $2.2 billion on health care last year and
expects that number to grow to $2.3 billion in 2006. The
auto maker's health-care costs have nearly doubled since
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