Alcatel-Lucent: Results of the 2009
Retiree Healthcare Negotiations for Plan
Year 2010
June 19, 2009
To: All Alcatel-Lucent Local Presidents
and Formerly Represented Retirees
The Joint Retiree Healthcare Committee (JRHC)
has completed annual negotiations in regard
to the Formerly Represented Retiree
Healthcare Plan for 2010. Each year, as
negotiated in 2004, the JRHC reviews Retiree
healthcare costs reported by the Company to
have exceeded the negotiated Retiree
Healthcare Caps for that year. The
Committee is required to "True Up" the
balance of the excess cost by making changes
to the Medical and/or Prescription Plan
Designs, as well as Provider-recommended
programs designed to help save future costs
for the Plans and for the Retirees. The
JRHC must also consider possible increases
to Retiree contributions.
The projections for Plan Year 2010 showed
a shortfall/true up of $23,400,000. Medco
negotiated contract savings reduced that
shortfall/true up by $14,800,000.
Retiree Contributions (premiums)
– This year I am happy to report that the
premiums the retirees pay for their
healthcare will remain the same as last year
and NOT increase the half percent as called
for in the contract. As we did in 2008 and
2009, the Unions were successful in holding
contributions steady for pre-65 Retirees at
8.5% – Single and 17% – Family. The
contributions for post-65 Retirees will be
remain the same as they were in 2009 at 5.5%
– Single and 11% – Family. The cost
to the Plan is $2,300,000.
Medicare Part B Coordination
– Alcatel-Lucent will be partnering with
Medco to provide Medicare Part B
coordination of benefits for certain drugs
and supplies that are covered under Medicare
for retirees and their dependants who are
Medicare Part B eligible. Some of the
prescriptions that are typically covered by
Medicare Part B are diabetes supplies (test
strips, meters), specific medication used to
aid tissue acceptance from organ
transplants, certain oral medications used
to treat cancer, and a full range of ostomy
supplies. Retirees will be receiving
communications from Medco that will outline
the program. For those drugs and supplies
that are covered under the Medicare Part B
Program, the co-pays that the retirees would
have been required to pay will be waived.
The Plan will pick up the cost of the
co-pays. The estimated savings to
the Plan is $1,000,000.
Prescription Drug Program
– The current Four Tier Plan design will
revert back to a Three Tier Plan design.
The co-pays for prescription drugs will be
as follows: Retail $10/$33/$55 and Mail
Order $25/$82.50/$137.50. Chemotherapy
drugs will be included in the co-pay
structure. In addition, the Generic and
Preferred Drug Step Therapy Programs will
add to new therapeutic categories. There
will be an expansion to the Prior
Authorization and Quantity-Duration
categories as well. The estimated
savings to the Plan is $1,547,000.
Medical Plan Design Changes
– The Mental Health and Chemical Dependency
out-of-pocket maximum will be combined with
the Medical out-of-pocket maximum and the
three free visits will be eliminated. What
this means is that there are no longer two
out-of-pocket maximums that must be met.
The Mental Health and Chemical Dependency
out-of-pocket expenses will apply towards
the Medical out-of-pocket maximum.
The cost to the Plan was neutral.
Air Ambulance benefit has been improved
to eliminate the cap of $5,000. The
cost to the Plan was neutral.
In addition to the projected savings
derived from the Plan changes, the Trustees
of the Taft Hartley Trust for Formerly
Represented Retirees have authorized that
$8,353,000 of Trust assets be utilized to
offset the remaining shortfall/true up.
Once again I would like to thank you for
your support and understanding as the Union
makes these difficult and necessary
decisions. If you have any questions,
please don't hesitate to e-mail me at
mflagge@cwa-union.org.
In Unity,
Martha Flagge
CWA Staff Representative
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