GM to cut retiree health care for salaried workers under 65
By Tim Higgins
Wednesday, Feb. 11, 2009
General Motors Corp. is reducing life insurance benefits for
most of its white-collar retirees and cutting back on company
provided-health care for some retired salaried workers younger
The cost-cutting move comes along with GM's announcement Tuesday
that it is cutting its worldwide salaried workforce by 10,000
and reducing U.S.
white-collar workers' base-pay by as much as 10%.
A GM employee compensation document obtained by the Free Press
shows that GM is cutting company-provided health care coverage
to retired salaried workers who are younger than 65 and eligible
A GM spokesman confirmed the change, which goes into effect Jan.
1, 2010. The change effects a small number of retirees, "a
few thousand," said Tom Wilkinson, a GM spokesman. He was
unable to immediately provide an exact number of people
He noted that other salaried retirees younger than 65 hired
prior to 1993 stay on GM-provided health care. Employees
hired after that date do not receive company-provided health
care in retirement.
The retirees losing their health care benefit will instead be
given a $260 per month medical expense credit to be used for
qualified health care expenses, such as monthly premiums,
deductibles and co-pays.
The move comes after GM last year announced it would stop
providing company-provided health care to retired salaried
workers over the age of 65 beginning at the start of 2009.
GM has also been informing salaried employees, hired prior to
Jan. 1, 1993, that their basic life insurance benefit would be
reduced upon retirement. It's a change that will impact
most current retired salaried workers. GM currently has
114,000 salaried retirees, Wilkinson said.
Active salaried employees currently receive a basic life
insurance policy worth two times their annual salary, which will
not change, the company said.
Upon retirement, however, GM is reducing the basic life
insurance benefit from 100% of annual base salary to 75% for
these select people during the first 10 years of retirement, the
company told workers.
In addition, the benefit will go from 50% to 25% following the
10th anniversary of the retirement. The company said the
benefit will not go to less than $25,000.
Employees hired after Jan. 1, 1993, do not receive a life
insurance benefit in retirement.
Wilkinson confirmed the changes.
"GM, like all companies, looks at benefits offered by other
companies. GM as a necessity for being competitive, we
want our benefits to be comparable to other companies but in
some cases where they're significantly richer than other
companies, we'll look to change them," Wilkinson said.
"They started phasing a lot of this stuff out years ago and
they've been trying to do it in a way that has sort of minimal
impact on people hired in under the previous understanding," he
All of these changes come as GM rushes to complete a long-term
viability plan to present to the
government on Tuesday as part of the $13.4 billion federal loan
program keeping the company afloat.