Ford Motor Co. announced that it will freeze the amount of money it spends on health care for white-collar retirees and require salaried employees to pay more of their health-care costs, according to The Wall Street Journal.
The newspaper added that the United Auto Workers announced an agreement with Ford that could save the automaker about $850 million per year.
Under Ford’s plan, retirees must start paying deductibles, and current workers must forgo pay increases to help the company pay for their health-care benefits. “Achieving the goals detailed in the plan is absolutely critical to our future and will require tough decisions, including addressing the rising costs of health care, which we’ve heard so much about,” Mark Fields, Ford’s new chief of North American operations, told employees in an email Tuesday, according to the Journal.
According to the paper, salaried workers will see their annual deductibles increase by as much as 33 percent, and their monthly premiums will rise an average of about 30 percent. Spouses who have coverage elsewhere will now pay $121 a month for health and dental coverage. Stepchildren of employees will no longer be eligible for coverage if another parent is legally responsible for the cost. And beginning in 2007, retirees will be on the hook for all health-care cost increases, the Journal reported.
Meanwhile, General Motors Corp. announced that it will stop making matching contributions to the 401(k) plans of salaried workers, according to Reuters. Spokesman Robert Herta told the wire service that the company currently matches 20 cents of each dollar, up to 6 percent of base salary; before last year, the match was 50 cents of each dollar. “We continue to monitor the business in determining when to reinstate the matching contributions,” he reportedly added.
GM also will no longer require that up to 3 percent of employees’ contributions be invested in the company’s stock, the wire service added. According to Herta, the automaker changed this policy to increase the investment flexibility of plan participants.