Ford Pushes Up Worker, Retiree Health Costs

February 26, 2003 (PLANSPONSOR.com) - In another sign of severe cost pressures plaguing US automakers, Ford Motor Co., is jacking up costs for medical care and prescription drugs for about 93,000 white-collar salaried workers and retirees and their families.

According to a Detroit News story, the move means higher deductibles, more money out of pocket, and more money for prescription drugs. The amount of the increase depends on several factors, including which health care plan an employee selects and the number of dependents covered.

For example, a salaried employee with a family enrolled in the Ford Comprehensive Medical Plan, will see the deductible jump from $250 to $600 while the out-of-pocket maximum annual payout will increase from $500 to $1,000.

Ford told employees that its health care costs jumped 13% in 2002 to $2.7 billion and predicted that the increases would keep up. “Health care costs are accelerating at a high rate and it’s a national problem,” Ford spokesman Jon Harmon told the News. “That’s the underlying cause of this action. Both the company and its employees and retirees have to share the burden of these increases.”

The moves don’t affect Ford’s active or retired hourly workers whose benefits are protected by United Auto Worker union contracts.

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The increases, which take effect June 1, come on top of Ford’s decision last year to start collecting health care coverage premiums from salaried employees and retirees. Ford also is tightening eligibility requirements for dependents of retirees. For example, a retiree who marries a spouse with children from a previous partner will no longer be able to obtain Ford coverage for those children.

Ford has a lot of company among US corporations when it comes to shifting health care costs to employees and retirees. On January 1, General Motors Corp. increased monthly premiums for its 160,000 white-collar retirees by an average of $25 a month (See   GM Driving Retiree Health Care Costs Higher ). And its increases mimic those of other major corporations. Medical care costs are escalating across the nation and workers at both large companies and small are paying more for medical coverage.

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