Lucent Retiree Healthcare Action Items

Attached, please find several documents in relation to the Lucent Retiree Healthcare Issue.

1) Lucent Retiree Healthcare Q and A's

2) Sample letter to Lucent Board of Directors and Officers (please modify as you see fit), indicating if you are an employee of Lucent and member of CWA; a Lucent retiree; a CWA member or a CWA Retiree

3) Sample letter to Legislators

In Unity,

Ralph V. Maly, Jr.
Vice President

RVM:drk
opeiu-2, afl-cio

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LUCENT RETIREE HEALTHCARE Q AND A'S

Q)  How much does Lucent spend on occupational retiree healthcare?

A)  Lucent hasn't spent a dime on providing retiree healthcare since their inception.  The approximately $500 million for 2006 occupational retirees' healthcare comes directly from the excess assets of the occupational pension fund.  Given the rate of inflation on healthcare costs, it is projected the cost for 2007 retiree healthcare will exceed $500 million.

Q)  Is it the excess assets in the occupational pension plan that have provided the retirees with their healthcare benefits all these years?

A)  This is correct.  By law if a pension fund is over-funded by a certain amount, the excess assets can only be used for retiree healthcare benefits.

Q)  Then why is Lucent raising the healthcare premiums?

A)  Raising the healthcare premiums is the surest way for Lucent to get cash in their pockets.  By utilizing the occupational pension plan for the company's healthcare obligation, getting prescription drug rebates and discounts, as well as Medicare Part D subsidies, the company is able to demonstrate a positive cash flow.

Q)  Didn't CWA bargain with Lucent a $400 million Trust fund to help offset the cost to the retirees?

A)  Yes; however, Lucent will only deposit the minimum funding requirement of $25 million into the Trust each year.

Q)  Couldn't Lucent take more money out of the pension fund and put it into the Trust?

A)  There is nothing prohibiting Lucent from putting more money into the Trust;however, Lucent has refused to do so.

Q)  Aren't there other cost saving options available that would not bankrupt the retirees?

A)  The Joint Retiree Healthcare Committee looked at a number of options, including plan design changes that would not have had as big an impact on the retiree as the drastic measure the company took.  Lucent, however, rejected all of the options the Unions proposed.

Q)  Doesn't Lucent receive a Medicare Part D subsidy from the government?

A)  Yes.  Lucent does receive a subsidy from the government for offering a Prescription Drug Plan that is better than the Medicare Part D Plan.  This year alone it is estimated Lucent will receive approximately $26 million in government subsidy. 

Q)  Is Lucent using the government subsidy to offset retiree costs?

A)  No.  Lucent has refused to use the subsidy it will receive from the government to offset retiree costs.  Lucent has taken the position that this subsidy is cash in their pockets and the retiree is not entitled to benefit from it.

Q)  Didn't Lucent receive cost savings from their healthcare and prescription drug providers?

A)  Lucent will receive approximately $101 million in savings over the life of the vendor contracts.

Q)  Is Lucent passing those costs savings to the retirees?

A)  Lucent is not passing all of the cost savings to the retirees.  Lucent is pocketing any savings derived from the retirees who retired prior to March 1, 1990.

Q)  Does the collective bargaining agreement prohibit Lucent from raising the premiums?

A)  No.  When the Unions negotiated the cost sharing, we anticipated that, with the rising cost of healthcare, it might become necessary to increase the premiums and/or make plan design changes over time.  What we did not anticipate was Lucent's ruthless behavior in its quest to raise cash for the company.

Q)  What can we as retirees do?

A)  We are asking both the retirees and active members to write and call their legislators and future legislators to let them know the outrageous position Lucent has taken and to plead for their help in reversing Lucent's position.  In addition, attached are the names, addresses and phone numbers of the Lucent Board of Directors.  Please express your outrage to them.

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Date:

Lucent Board of Directors/or Officer

(See list from original document sent out to retirees)

Dear

As [an employee of Lucent Technologies and a member of CWA] or [a CWA member] or [a CWA Retiree], I am deeply disturbed and disappointed in the outrageous increase in the health care premiums (150%) for retirees.  Aside from the discounts Lucent is receiving from its vendors, Lucent is getting approximately a $24 million subsidy this year alone from the U.S. Government because the prescription drug plan offered to Lucent retirees is better than Medicare Part D.  In spite of this, Lucent has seen fit to stick a huge premium increase onto those who can afford it the least, the retirees.  Lucent has not paid a nickel toward the cost of health care for its formerly-represented retirees since its inception.  All the money has come from the pension surplus.  Neither you nor the upper management people at Lucent have made any sacrifice to improve the financial health of the company.  Instead, you choose to put an incredible hardship on retirees, some of whom are barely surviving financially now.  In addition, you choose to do nothing to change the atrocious condition of health care in America.  I urge you to undo this great travesty of justice and take the burden for health care costs away from the retirees.

Sincerely,

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Date:

Senator or House Representative_______________

Re:  Urgent Appeal

Dear Senator or Representative ____________:

This is an update on the issue of the technical changes to the 420 Transfer issue of the Pension Reform Act as it pertains to Lucent Technologies and the Unions CWA and IBEW.

I have enclosed a letter all Lucent retirees are receiving from CWA.  As you can see, despite Lucent and its unions agreeing to continue to work to get those technical changes made, Lucent has seen fit to impose a 150% increase to the premiums their retirees must pay for health care.  This is nothing short of outrageous.  Lucent's financial health may be somewhat shaky.  However, none of their top management or members of the Board of Directors have made any sacrifice for the financial health of the company.  Now they seek to place the additional burden of health care costs on the people who can least afford it.  This, while Lucent's entire portion of the formerly-represented retirees' health care obligation comes from the occupational retirees' pension plan, costing the company zero ($0) in operating cost.  Despite this, Lucent has chosen to force the retirees to pay premiums that were more than doubled.  In addition, Lucent is getting millions of dollars in discounts from the prescription drug companies, along with the millions of dollars in Medicare "D" subsidies.  Lucent is actually making money on the deal, while they increase the premiums for those of us who have the least ability to pay.

This further illustrates why we need drastic health care reform in this country.

I urge you to contact Lucent management and the board of directors and urge them to stop this travesty of justice.

Sincerely,