care cap creating 'bleak' view, advocate says
By Jeff Smith
Rocky Mountain News
Saturday, December 16, 2006
Mary, or Mimi, Hull lives
comfortably in a condominium near downtown Denver. Cuts in
her retiree benefits aren't likely to change her lifestyle
in the immediate future. But they do have an effect. As it
is, her pension is $21,180 a year and, like other retirees,
she hasn't seen an increase for 10 years. She left U S West
before she was eligible for a full pension and took a 26
Her life insurance is being slashed from $84,000 to $10,000.
"I don't have a spouse, but I did want to provide something
for my grandchildren," she said. "That's all wiped out."
And, she said, there's no way of predicting the long-term
impact of Qwest's decision to cap its contribution to
post-1990, nonunion retiree health care. She noted Qwest
already has been shifting more costs to the retirees.
"First they told us they were doing an 80-10 split; now
it's at 71-29," Hull said. With the cap, "it will get to be
a more and more bleak picture."
Hull, as president of the Association of U S West Retirees,
is a strong advocate for retirees and often speaks on their
behalf at annual stockholder meetings. She sees Qwest as a
company that is "putting the squeeze on retirees who don't
have the opportunity to increase their income."
"My hot button," Hull said, "is that (executives) are doing
it to retirees and not doing any contributions themselves.
It's just unfair. If there needs to be pain, there needs to
be pain everywhere."
The benefits cuts actually are coming at a time when Qwest
is generating more than $1 billion in cash.
"That's why we're chalking it up to greed," Hull said.
Greed too, retirees group officials say, because the cuts
also are coming at a time when top Qwest executives have
been cashing out chunks of options -- making more than $50
million combined in the process.
"I think it rubs salt into the wound," Hull said, "I think
it was very insensitive at best."
Qwest said CEO Dick Notebaert would be donating the
after-tax profits of his $18 million stock-option gain to
"Charity begins at home," Hull responded.
Hull also doesn't buy the argument that Qwest must do this
for competitive reasons.
"Let me tell you, it's not happening at the new AT&T. It's
not happening at Verizon," Hull said. "Comcast probably
doesn't have as many retirees, but I'd like Mr. Notebaert to
be more specific about who are the competitors."
- Qwest is the only former regional Bell to
eliminate its stockholders dividend. It did so under former
Chief Executive Joe Nacchio in 2001. Retirees traditionally
have relied in part on dividend-paying stocks. Many
retirees also lost tens if not hundreds of thousands of
dollars when Qwest stock plummeted in 2001 and 2002.
- Retirees haven't had a pension increase in 10 years.
- Qwest has required post-1990 nonunion retirees, about
9,000 of them, to pay 20 percent of their health care
premium since 2004. Some retirees say the figure now is
closer to 30 percent, though Qwest won't comment.
- Starting Jan. 1, Qwest will cap its contribution to
health care premiums for post-1990 nonunion retirees -- that
means that group will have to pay for all increases.
Post-1990 union retirees likely will face a similar cap in
2009, while pre-1991 retirees are protected by a court
- Starting Jan. 1, Qwest will cap life insurance benefits
of all 48,000 retirees at $10,000. Previously, the benefits
were equal to a retiree's last year's salary, sliding down
to a half-year's salary for some groups.
- Qwest threatened to eliminate the death benefit -- a
benefit payable to the surviving spouse when a retiree
dies. The benefit, which come out of the pension trust, is
equal to a year's pay at 1993 rates. The issue is in
- Qwest pays a significant amount on retiree
health care, $383 million in 2005, according to a regulatory
report. But that was down from $391 million in 2004.
- Post-1990 nonunion retirees contributed $26 million to
Qwest toward health care premiums in 2005, and a union
health care trust provided a reimbursement of $206 million.
Qwest also received a Medicare subsidy of $38 million.
Those reimbursements or contributions total $270 million.
Career: Worked in benefits and training at Mountain Bell /
U S West for 25 years, leaving in 1995.
Costs: Will lose $74,000 in life insurance. Paid $120 a
month for health care and dental in 2006, will see that
increase to $161 in January.