HOW MUCH DO RETIREES HAVE TO PAY FOR COVERAGE UNDER THE NEW PLAN?
The health care crisis has tested the limits of affordability for many companies who must remain competitive in order to stay in business. Some, sadly, have gone out of business due in part to this kind of unabated financial pressure. The significant cost growth has been relentless for more than a decade, and many companies have discontinued retiree medical insurance coverage altogether. In general, there is a transition away from offering this coverage.
At Lockheed Martin, we provide benefits to some 540,000 employees, retirees and their families. That is a huge undertaking by any measure. Given the intense cost escalation and need to compete in markets that do not generally offer retiree medical, we decided to eliminate our subsidy for health care for new hires while continuing to offer coverage to current retirees. Employees hired after Jan. 1, 2006 will receive no company subsidy for medical coverage when they retire. It is not something we wanted to do; it was necessary to sustain our business in an extremely unforgiving market environment.
For those eligible for retiree medical, plan insurance premiums have exceeded “caps” or maximum company contributions established shortly after the merger of Lockheed and Martin Marietta to ensure the corporation’s future viability in the midst of volatile cost projections. It has only been in the last few years that the costs of many of our plan premiums have surpassed these maximums. The retiree is responsible for paying the difference.
Specific contribution costs for retirees will be available at the time of Annual Enrollment.
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