The Chicago Daily Herald - October 21, 2005

 

Company says dependents will be required to pay as much as 39 percent more

By Anna Marie Kukec
Daily Herald Business Writer
Posted Friday, October 21, 2005

Thousands of Lucent Technologies management retirees have been receiving notices this week that monthly health-care premiums for dependents in 2006 could increase as much as 39 percent.

The Lucent Retiree Organization blasted the increases as “unjustified,” said group spokesman Edward Beltram.

“Lucent now has the financial capability to fulfill its promises to retirees for health-care insurance at a reasonable cost,” said Beltram. “Lucent has demonstrated that it has the ability to pay its top executives record compensation while the company is a shadow of what it once was. It is time that the company lived up to its moral commitments to retirees.”

Retirees have been at odds with Lucent officials for the last few years as the global telecommunications equipment maker continued to slice benefits while turning a profit. At the same time, health-care costs nationwide have soared.

Lucent provides health-care coverage for about 125,000 retirees and their 75,000 dependents. There are 11,000 Lucent retirees in Illinois, including 5,300 who had been managers, with many based in Chicago, Naperville and Lisle.

Lucent said it is increasing premiums for dependents of retirees, not the retirees themselves, who had retired on or after March 1, 1990, and made more than $65,000 when they retired. About 9,000 are affected, said Lucent spokeswoman Mary Ward.

“We are no longer able to subsidize the cost of their dependents’ health care. However, they can choose to buy it from us at group rates,” said Ward.

She said the increase varied based on the plan. “But there could be instances where it increased by that much (39 percent),” Ward said. “However, the vast majority of our retirees and their dependents saw no or at most minimal increases in their premiums for the second year in a row.”

Ward said Lucent last month provided a refund of about $14 million to retirees because the cost of their health care was lower than anticipated in 2005.

Some retired couples reported their monthly healt-care premiums have risen from $42 in 2001 to $516 in 2005. They are expecting about $690 in 2006, said Beltram.

Beltram also said that Lucent, in addition to being profitable, received a $902 million refund last August from the Internal Revenue Service, which could have been a possible pool of money to help offset the extra costs to retirees.

Ward said the IRS refund goes into the general corporate fund. “As we have said all along, we will balance the needs of our retirees with Lucent’s ability to pay and remain competitive in a dynamic and challenging marketplace,” said Ward.