The Association of U S West Retirees



Chrysler Revamps Health Benefits
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 premiums.

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 expenses.

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 2000.

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