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New health plan irks Embarq retirees
Changes next year to affect 100 locally
By Tasha Kates / tkates@dailyprogress.com | 978-7267
October 26, 2007
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When Vera Terrell retired from her clerk job with Sprint in 1993, she thought
she would be set for life when it came to insurance.
Terrell, now 73, stayed with the company for 23 years. The Charlottesville
resident retired with $25,000 in life insurance and the ability to keep her
prescription drug plan and health insurance through Sprint.
But Terrell won’t have the perks much longer. Embarq, which split off from
Sprint a year and a half ago, sent a letter to its 14,000 retirees July 26
telling them their health and life insurance policies would change significantly
by 2008, ending some coverage to retirees.
Some of the roughly 100 Embarq retirees in Charlottesville are now writing to
local political figures, including U.S. Sen. John W. Warner, R-Alexandria, and
5th District Rep. Virgil H. Goode Jr., R-Rocky Mount, to share their plight and
support HR 1322, an act in front of the House of Representatives that would stop
group health plans from reducing health benefits after a person retires.
The measure, known as the Emergency Retiree Health Benefits Protection Act, also
would require health plan sponsors to give retirees the option of benefit
restoration unless it is not beneficial for the retirees to do so, is not
administratively feasible or if it would cause a “substantial business hardship”
to the company.
Of companies with more than 200 employees, 33 percent offered retiree health
benefits in 2007, according to a benefits study completed by the Kaiser Family
Foundation and the Health Research and Education Trust. In the
telecommunications, communications and utilities industries, 47 percent of large
companies offer retiree health benefits.
Embarq’s move will save the company $30 million annually, spokesman Charles
Fleckenstein said. The affected include retirees from Sprint and Centel.
“The old days of when the telephone company was it are gone,” Fleckenstein said.
“We find ourselves as a communications company competing against cable companies
that don’t deliver services to retirees. We have to remain competitive. We had
to make a decision to cut back.”
The telecommunications company, based in Overland Park, Kan., will no longer
offer medical coverage for people eligible for Medicare, will stop providing a
monthly subsidy for Medicare premiums and cap its life insurance benefit at
$10,000. Charitable contributions made by any employee or retiree stopped being
matched by the company after Sept. 1. Embarq will continue to offer medical
coverage to retirees and dependents who are ineligible for Medicare.
The company’s initial letter to the retirees said recent changes in Medicare
make it “more practical and efficient” for eligible individuals to buy coverage
directly through a national carrier. Embarq retirees have been offered a plan
through Aetna that will not deny anyone with pre-existing medical conditions.
Embarq retiree Edna Bishop, of Earlysville, is planning to pick up her pen and
write to her representatives. Bishop, 69, said she never thought the
telecommunications company would make use of a clause in the retirement
paperwork that she used to dole out as a human resources employee. The clause
said the company could change the benefits offered at any time.
“They said they were doing it for the shareholders,” Bishop said. “Well, most of
us are shareholders too.”
Bishop, who was with the company for 34 years, said many Embarq employees
remained with Sprint and Centel to reach the maximum of $40,000 in
post-retirement life insurance. For Terrell, the life insurance cap is the worst
part of Embarq’s announcement.
“You can’t even bury yourself for $10,000,” Terrell said. “You are actually
leaving your spouse with nothing.”
Bishop and her husband have Medicare, but they have been using her retirement
perks from a buyout to supplement the program - free medical insurance, $40,000
in life insurance, free prescriptions and two years’ pay came in the deal.
Bishop said she has spoken to former employees who are upset over the changes.
Goode also has heard from Embarq retirees over HR 1322, an act he said most
companies would oppose but he is “favorably inclined” toward it.
Jonathan Murphy, a spokesman for Warner, said the senator’s office had received
letters from Embarq retirees. Warner has since contacted the State Corporation
Commission and the U.S. Department of Labor’s Employee Benefits Security
Administration regarding their claims.
Embarq has been receiving some feedback on the changes from retirees, too.
“I can’t comment on the response,” Fleckenstein said. “Retirees have been
letting us know how they feel.”
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