The (New Jersey) Star-Ledger  - October 20, 2005

Lucent jacks up retiree health-care premiums

Thursday, October 20, 2005
BY KEVIN COUGHLIN
Star-Ledger Staff

A few weeks ago, Lucent retiree Edward Karecki Sr. was delighted to receive a $2,000 rebate on his health-insurance premium.

 But the Spotswood resident found a bitter pill in last week's mail. Lucent informed him that next year, monthly premiums for him and his wife will shoot to $540, from $191.

 "How do they justify this?" Karecki, 68, asked yesterday.

 A company spokesperson called the move vital to Lucent's health. "This does not impact the vast majority of our retirees or dependents, for that matter," said Mary Ward of Lucent.

 According to the Lucent Retiree Organization, 30,000 management retirees have been told their monthly health-care premiums will increase starting Jan. 1. It marks the latest in a series of Lucent benefit reductions since 2003, and is part of a broader national story.

 General Motors plans to slash $1 billion in yearly health coverage for 750,000 workers and retirees. Sears Holdings, Visteon and Northwest Airlines have announced similar plans to slash or eliminate retiree benefits.

 Some retired couples from Lucent who paid only $42 a month just four years ago are paying $516 a month this year and will see monthly health premiums hit $690, according to LRO President Ken Raschke. He said the increases are especially galling in light of Lucent's recent profits and a $902 million refund the company received from the Internal Revenue Service in August.

 "Lucent continues to place the burden of its profitability on the pockets of management retirees," Raschke said in a statement. "This is morally wrong."

 Ward said the higher premiums affect about 9,000 dependents of management retirees.

 Lucent no longer subsidizes health care for dependents of management employees who retired after March 1, 1990, and who earned more than $65,000 when they retired. Instead, the company offers these dependents health insurance at group rates. Premiums weren't keeping pace with their health costs, Ward said, and so the dependents' rates are being increased.

 "We do provide very good health-care coverage for our retirees," Ward said. "But we have to balance those needs with Lucent's ability to pay and stay competitive in a very competitive market."


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