Results of the Joint Retiree Healthcare Committee (JRHC) negotiations for calendar year 2016

To:     Alcatel-Lucent Local Presidents and Formerly Represented Retirees

Re:     Results of the Joint Retiree Healthcare Committee (JRHC) Negotiations - Calendar Year 2016

As we have reported in the past, as negotiated in 2004, each year the JRHC reviews the formerly represented retiree healthcare costs, projected by the Company, to have exceeded the negotiated Retiree Healthcare Caps for the upcoming year.   The JRHC 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 over and above those mandated by the collective bargaining agreement. 

For Plan Year 2016 the deficit the committee was faced with was $14,600,000.  The JRHC was able to reduce that amount by agreeing to have the United Healthcare Medicare Advantage Plan (MAPPO) be the automatic default option during open enrollment for people who are currently in the MAPPO as well as those who have elected Traditional Indemnity (TI).  Retirees will still have the option to elect TI or an HMO during the open enrollment process if they so choose. The projected savings from this is $2.2 million dollars.

Given this amount of deficit the Committee was able to get by with a modest increase to the retiree contributions; the contributions for Pre-65 Retirees will be 13 ½ % for single and 27% for family. (Current premiums are 13% single and 26% family) The premiums for the Post 65 Retirees will be 9% for single and 18% for families.  (Current premiums are 8 ½ % single and 17% family)   In addition, due to the increase cost to the plan; the cost adjustment contributions for those who elect Traditional Indemnity (TI) over the default MA PPO will continue.   The cost adjustment contributions for pre 3/1/90 retirees who elect TI will be 7 ½ % single and 15% family.  For those who are post 3/1/90 retirees who elect TI the cost adjustment contributions coupled with the premiums will be 16 ½ % single and 33% family.  The projected cost savings beyond the 0.5% contractual increase is an additional $1,000,000.

Slight modifications to the prescription drug co-payments were made to the Formulary and Non-formulary drugs for both retail and mail order.  The generic drug co-payments remain the same.  The new co-payments are Retail - $10/42/75 and Mail Order - $25/105/188.  In addition, the Retail Only Deductible will increase from $50 to $75.  The out of pocket maximum remain the same at $1,600.  The Prescription Drug Utilization Programs that we currently have in place will be enhanced to include other categories of drugs including compound medications.  There are no changes to the medical plan.  The projected savings attributed to these changes is $3,365,800.

Finally, the JRHC will be utilizing $8,034,200 from the Taft Hartley Trust to shore up the remainder of the deficit.

If you have any questions please email Martha Flagge at mflagge@cwa-union.org or Mary Jo Reilly at msherman@cwa-union.org.