The Association of U S West Retirees



GM to cut retiree health care for salaried workers under 65
By Tim Higgins
Detroit Free Press
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 than 65.

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 for Medicare.

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 impacted.

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 added.

All of these changes come as GM rushes to complete a long-term viability plan to present to the U.S. government on Tuesday as part of the $13.4 billion federal loan program keeping the company afloat.