Retirees fighting back over Kaiser plans
Hike in medical premiums prompts group to seek legal help
John Stucke - Staff writer
Stung by a company plan to hike medical insurance premiums, retired managers and salary employees of Kaiser Aluminum Corp. plan to hire a law firm and intervene in the company's unfolding bankruptcy case.
"We're committed to protecting our benefits," said Robert Irelan, who retired from Kaiser in 1999 after a 31-year career. "All of us are loyal to the company, but what they've proposed is too much of a burden on retirees."
Days before filing for Chapter 11 bankruptcy protection, Kaiser alerted its 4,500 salaried retirees that premiums would change. In Washington state there are about 600 retired salary workers. Another 71 reside in Idaho.
To keep medical benefits, retirees who are more than 65 years old will have to pay $130 per person each month. For younger retirees, the cost is $175 per person.
The changes are scheduled to begin May 1.
Irelan, speaking on behalf of the Kaiser Aluminum Salaried Retirees Association, said the move will shift about $10 in costs from the company to retirees.
Especially troubling was the timing, he said.
"We raised concerns that this was disclosed in such close proximity to the bankruptcy," Irelan said. "It came as a surprise and a shock."
Scott Lamb, Kaiser's vice president of investor relations and communications, said the company needed to offset the rapidly climbing costs of medical benefits.
"The issue here is that we have maintained retiree medical coverage for our salaried retirees. That is increasingly rare in corporate America today," Lamb said. "All we did was institute higher premiums for those who participate."
Lamb said the timing of the announcement was unrelated to the company's bankruptcy filing four days later on Feb. 12.
"We saw a pattern where many companies are eliminating this altogether, but our retiree population is important to us," he said. "We recognize the contributions they have made, but we needed to have some cost-sharing in this program."
With liabilities of $3.1 billion, Kaiser filed for bankruptcy protection. Low aluminum prices, recession and maturing debts hurt the company. The company is paying $70 million a year in retiree pensions and medical care.
In a letter to retirees, Kaiser vice president James McAuliffe wrote that the cost of medical care is escalating at double-digit rates. The costs of salaried retirees, he wrote, accounts for nearly three-quarters of the overall salaried medical expenses.
Instead of reducing medical and prescription drug costs, Kaiser chose cost-sharing.
"I recognize that these changes are difficult," McAuliffe wrote. "However, please know these changes are important and the decision to make them was carefully considered."
Irelan said the retirees association is worried that the premiums will may hurt those who retired with modest pensions.
"These may be folks who were below the manager status, but who were good solid employees and spent their careers at Kaiser," he said. "It's a very good medical benefits plan upon which a lot of retirees depend ... it was part of what made family feelings toward the enterprise so strong."