GM Retirees To Pay More For 2008 Health Care

General Motors Corp. announced a couple of years ago that its salaried retirees will shoulder much more of their health care costs this year. This is an effort to save money for its restructure plan.

The raise in deductibles, out-of-pocket maximums, co-payments and premiums will pay for the expenses that go beyond a payment cap the automaker set in 2006 on its salaried retiree health care tab. The cap sets GM's annual liability for this group's benefits at the level it paid in 2006. As health costs rise, salaried retirees will continue to pay more for their health care to make up the difference, reported The Detroit News.

Capping payments is the automaker’s solution to the intensifying rivalry in the global automotive industry along with the constant increase in health costs. The increases to salaried retiree health care costs this year will help GM make up the difference, some $45 million, between actual health care costs in 2007 and the cap, said Michelle Bunker, a GM spokeswoman.

The Detroit automaker spent $3.3 billion for retiree health care in 2006, a tab GM does not break down by salaried or hourly status. The automaker has 432,000 retirees, of which 100,000 are salaried.

The increases differ depending on the type of plan. But for most salaried retirees covered with an Enhanced PPO plan, the changes will cover an increase of plan deductibles from $500 to $750 for an individual and from $1,000 to $1,500 for a family. Also, it was announced that prescription co-pays for generic drugs will double from $5 to $10 for a drug filled at a retail location and from $10 to $20 for a drug ordered through the mail. Additionally, out-of-pocket maximums will surge from $1,500 to $2,000 for an individual and from $3,000 to $4,000 for a family.

Co-pays for preferred and nonpreferred drugs also will increase, and for the first time, the automaker will require retirees taking certain drugs to pay a co-pay higher than the one it has set for nonpreferred brand name medications, the report continued.

The changes are not sitting well with some retirees, who feel "cast adrift," said Richard Dreist, who retired from GM in 1992 after 30 1/2 years. Dreist is appealing the automaker’s decision to slash coverage for Cialis, a drug he takes following a bout with prostate cancer. "It's a quality of life issue," he said.

Dee Edington, the director of the Health Management Research Center, at the University of Michigan, has this to say: "From the retirees' point of view, it doesn't seem like a very loyal program. On the other hand, it is a trend that GM is following."

To further cut costs, the automaker will offer coverage for retirees who are eligible but do not enroll for Medicare Part B. It will only pay the amount Medicare would pay for care covered under Part B. Care covered include durable medical equipment and limited services thus leaving the retiree responsible for the rest of the bill.

But the automaker has a slice of good news for the upcoming year. GM will extend the number of days for which salaried retirees can get prescriptions filled at a retail pharmacy, from 21 to 30 days at a time.

"It really irritated people that they could only get three weeks at a time," Bunker noted. "Retirees should be happy about that."

GM has to take its plan seriously otherwise the company will be outpaced by other automakers. Other automakers like the maker of Dodge brake dust shields also are serious with their restructure plans.

Evander Klum is a Business Administration graduate who hails from Alabama. He enjoys extreme sports and he is also a car racing fanatic. At present, he works as a marketing manager at an advertising agency in Cleveland.