Life insurance, health care hit. The director of a group of
retirees calls the changes "heartless" and says the issue may
end up in court.
By Andy Vuong, Staff Writer
Wednesday, October 25, 2006
Despite posting two straight quarterly profits and initiating a
stock buyback of up to $2 billion, Qwest plans to cut
health-care and life-insurance benefits for thousands of
The Denver-based company also told retirees this month that
there will be no future cost-of-living increases in their
pensions, said Nelson Phelps, executive director of the
Association of US West Retirees. The last increase was in 1996,
Qwest, which acquired US West in 2000, said Tuesday the company
is merely responding to market conditions.
"Health-care costs are rising at an alarming rate for all
industries," said Qwest spokesman Bob Toevs. "The change is
simply a response to market conditions -- conditions that are
affecting every business and its employees."
The cuts are "heartless" and are "the most significant any
retiree has seen," Phelps said. The retirees association is
reviewing options to see whether it can fight the changes in
court, he said.
Starting in January, Qwest will require any former management
employee or nonunion employee who retired after 1990 to pay any
future increase in health-care costs. Last year, Qwest pushed a
portion of premium increases onto the retirees. Toevs said the
company will still cover a majority of retiree health-care
premiums after the latest change.
The company also is capping life-insurance benefits for all
retirees at $10,000. Retirees were previously given the
equivalent of one year's annual salary in life-insurance
The changes "would probably put us in line with other companies
across a wide swath of industries, including other
telecommunications companies," Toevs said.
Other companies that have announced pension and health-care cuts
this year include IBM and General Motors.
Qwest and the retirees association disagree over how many people
will be affected by the changes.
Toevs said the company has about 48,000 retirees nationwide, and
a "minority of that population" would be affected by the
health-care change. Former union employees will still be fully
covered for any premium increases.
Phelps estimated that the company has about 50,000 to 60,000
retirees and that about half would be affected by the
health-care and life-insurance cuts. The reductions could save
Qwest $20 million to $30 million annually, Phelps estimated.
The company has about 7,000 retirees in Colorado.
Phelps, who has been supportive of Qwest chief executive Rich
and Notebaert since he joined the company in 2002, called him a
"I think it's heartless," Phelps said. "I think we've seen the
real Mr. Notebaert -- a person who lacks compassion and concern
about the very people that built the business that he's now
managing and reaping financial rewards from."
Staff writer Andy Vuong can be reached at 303-954-1209 or