Human Capital & Careers

Chrysler Hikes White-collar Health Fees

The contribution by salaried employees toward their health-care costs will rise from 27 percent to 31 percent of the total annual cost.
Stephen TaubMarch 16, 2006

The embattled auto industry continues to chip away at employee benefits.

Chrysler Group announced sweeping changes to its health-care programs, asking current and retired salaried employees from the professional-administrative, management, and executive ranks to pay more out of pocket. “The more you make, the more you will be asked to contribute,” Chrysler stated in a press release.

Next year, premiums for professional-administrative employees will not be affected, on average. However, mid-managers will face a premium increase averaging about $450, and executives, $1,500. Top executives will be responsible for up to 100 percent of their health-care premiums.

The company asserted that in 2006, it expects to shell out $2.3 billion for health care, and that since 2000, its health costs have doubled.

“Chrysler Group must continue to drive down health-care costs in order to sustain our profitable growth in a market that is intensely competitive,” said group president and chief executive officer Tom LaSorda, in a statement. “Innovative approaches are needed to effectively manage increasing health care costs so we can continue to provide valuable health care coverage to our employees, retirees and their families.”

By the company’s reckoning, health-care costs for salaried Chrysler Group employees average about $11,000 per year. Employees now pay about 27 percent of that cost, or $3,000, in pre-tax premiums, co-pays, and deductibles. The new health plan will raise the employee contribution to 31 percent, the company added.

For Medicare-eligible retirees 65 and older, Chrysler is establishing a health care retirement account of $1,750 annually, plus an additional $1,750 for a spouse or domestic partner, assuming retirement with 100 percent of the necessary service-year credits. In 2008, the reimbursement will increase by 3 percent for the retiree or surviving spouse.

Meanwhile, Ford Motor Co. announced plans to charge salaried employees extra if they want to include their spouses on the company’s health-care plan, according to the Associated Press. The fees — $110 a month for medical coverage and $11 a month for dental — would affect only employees whose spouses have access to health benefits elsewhere, the wire service added.

Ford spokeswoman Marcey Evans told the wire service that the struggling automaker “has to balance the cost of health care that it faces, the increase of costs that it faces every year.” Ford spent $3.5 billion on health-care expenses in 2005, compared with $3.1 billion the previous year, the AP added. The company has not issued a forecast for this year.

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