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Automaker Ties Health Benefits Costs To Income

by Staff Writer

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A unit of Daimler Chrysler Corp. is making higher-paid employees bear more of the brunt of rising health coverage costs.

Chrysler, Auburn Hills, Mich., says it will link non-union employees’ share of 2007 health coverage costs to their rank and base salary levels.

The average employee will be responsible for the same share of 2007 health coverage costs that they now assume, but top executives will have to pay 100% of their health coverage costs, Chrysler says.

Average annual costs will increase about $450 for mid-level managers in 2007 and about $1,500 for typical executives, Chrysler says.

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Chrysler says it is making the change because it now spends $2.3 billion on health care each year, and the total has doubled since 2000.

Chrysler also is tying health care premiums for retirees under age 65 to the pay they were earning when they left the company. Early retirees who were earning $171,000 or more when they left the company may have to bear 100% of the brunt of increases in health care costs.

For retirees over age 65, Chrysler says it will contribute $1,750 per year to health care retirement accounts for the retirees and $1,750 for spouses or domestic partners.

Retirees can use the accounts to pay for Medicare Part B premiums, Medicare Part D premiums, Medicare supplement insurance, and dental and vision coverage, Chrysler says.