Results of the 2009 Retiree Healthcare Negotiations for Plan Year 2010

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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