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KATY NICHOLSON | Daily Herald EMBARQ retirees show their dissatisfaction with
changes the company is making to their retirement packages. Pictured from left
are Mike Ellis, Betsy Sumner, Louis Ellis and Anne Wilkinson.
Claim EMBARQ is breaking its promises
Katy Nicholson, Herald Staff Writer
ROANOKE RAPIDS - More than 20 retirees in red shirts rallied in front of EMBARQ
headquarters Monday, and one participant wondered aloud whether the company
hated having them there as much as they hated having to be there.
They were there to protest what many EMABRQ retirees view as the company's
decision to break its promises.
In July, retirees across the country received a letter from EMBARQ stating that
three elements of their retirement package would be changing.
First, the company will no longer offer company-sponsored medical coverage to
Medicare-eligible retirees or Medicare-eligible dependents beginning Jan. 1,
2008. Those retirees and dependents who are not Medicare-eligible will be able
to continue their current health care plans.
Second, effective Sept. 1, the company-provided life insurance benefits for
those who retired before Jan. 1, 2004, are no longer provided for retirees
participating in the North Carolina Telephone & Telegraph Employees' Beneficiary
Association.
Finally, also as of Sept. 1, EMBARQ is no longer providing matching gifts for
donations retirees make to charitable organizations.
The changes will affect about 14,000 people nationwide. North Carolina has the
largest retiree concentration, with 3,100.
For a few hours on Monday morning, the retirees marched in front of the
building, holding up signs and waving at passing vehicles and occasionally
receiving a honk from a car or truck horn.
“We were the backbone of their company,” said Steve Jenkins, who in 1999 retired
after 33 years as a central office and equipment technician. “We built the
company to where it is, and now they're shooing us out the door.”
The letter explains the changes are being made because: “To offer high-quality
products and services to our customers, EMBARQ must continuously adapt to
today's fast-paced and changing communications market. This means that, as an
employer, we must periodically adjust the programs we offer to keep the company
competitive.”
For many retirees who spent most of their lives working for Carolina Telephone,
United Telephone and Sprint, that reason isn't good enough.
Jenkins said when he retired from Sprint, he asked numerous times whether his
benefits were guaranteed.
“They said, ‘Yes, yes, yes. What you have is what you'll have the rest of your
life.'”
Now, when he sends in his phone bills - up until two years ago, retirees were
provided free local telephone service - he writes on the return envelope,
“Sprint/EMBARQ has stole most all my benefits that they guaranteed me after 33
years of faithful and dedicated service at their company.”
“There's nothing else they can steal from me,” he explained. “I'll lay it on
them.”
Company viewpoint
Beginning in 2008, the company is expected to save $30 million annually due to
the retirement package changes, according to Tom Matthews, an EMBARQ
spokesperson. The long-term savings is expected to be more than $300 million.
Matthews cited a survey which indicates only 29 percent of companies offer
medical coverage to any of their retirees and only 19 percent offer it to those
who are Medicare-eligible. EMBARQ is simply taking the same steps most other
companies have taken in the last decade, Matthews noted.
Medicare-eligible residents had been paying premiums for their company-sponsored
supplemental plan, Matthews noted, and now the company is “getting out of the
insurance business” in that sense.
As for the matching gifts program, Matthews said, less than 1 percent of
retirees took part in it and nearly 70 percent of companies exclude retirees
from such programs.
Retirees recently received an additional letter informing them that Aetna has
made a commitment to offer coverage to all Medicare-eligible retirees and
dependents, and none will be excluded because of pre-existing conditions. Those
who have their dental plans through EMBARQ will be able to continue that
coverage.
Aetna can be a starting point for retirees, Matthews said, as they have many
other options for coverage. About 12 percent of Medicare-eligible retirees
already had been using private supplemental plans other than what was offered by
EMBARQ, he noted. The company set up a Web site (www.embarq.com/retiree) and
toll-free number (888-722-4372) to help address retirees' concerns.
The company has been up-front about the situation from the beginning, Matthews
said.
“Essentially every communication that was made to retirees indicated that the
benefits were subject to change,” he said.
The issue is particularly complicated because most of the retirees never
technically worked for EMBARQ, which was spun off from Sprint in May 2006.
Most worked for Carolina Telephone, United Telephone and Sprint. Retirees who
are covered by the Carolina Telephone life insurance (VEBA) will lose their life
insurance from EMBARQ but keep their VEBA coverage. Those who are not covered by
VEBA will have their EMBARQ life insurance capped at $10,000.
Alton Hanford of Henderson, president of Communications Workers of America Post
3682, which covers such cities as Roanoke Rapids, Rocky Mount, Henderson,
Oxford, Wilson, Tarboro and Wake Forest, said in a phone interview he's heard
from many retirees who are upset about the changes to their benefits.
Other groups in the state have been holding similar rallies, he said. Hanford,
who retired from Sprint in 1995 after nearly 40 years of work, said he was
verbally promised his benefits would stay with him for the rest of his life;
however, in the written material, the company reserved the right to change them
at their discretion.
Hanford said he wrote to Gov. Mike Easley and the North Carolina Utilities
Commission on March 17, 2005, when word spread that Sprint would be merging with
Nextel and EMBARQ would be spun off the company.
He wrote that he wanted to make sure enough money was being transferred to
EMBARQ for the company to keep up with retirement benefits. Easley replied,
saying he shared Hanford's concerns and was going to forward the letter to the
state Utilities Commission, which never responded to Hanford.
Hanford said the company should be able to afford the retiree benefits, and
cited the 2006 compensation of EMBARQ's officers, which can be found in the
company's April 26, 2007, shareholder report. The compensation includes the
$24.1 million-dollar termination package of former Chief Operation Officer
Michael B. Fuller.
“When you see that, it just kind of burns you up,” he said, noting
Communications Workers of America is still investigating the possibility of
legal action.
Kenneth White, who worked in Roanoke Rapids for nearly 33 years doing cable
splicing, installation and repairs, acknowledged the disclaimer, which reserved
the company's right to change retirement benefits, but he was led to believe he
would have his benefits for life.
White said he would have invested much more in his private life insurance policy
if he'd had any idea the company would actually take such action. About 35 or 40
retirees in Roanoke Rapids are being affected by this, he said.
“Retirees figured that was something they wouldn't have to look into, it was
something they wouldn't have to think about ...,” he said. “I was banking on
this money that they've taken away from my wife.”
Charles Cooper quit his $2.58-per-hour job at the paper mill in 1966 and went to
work at the telephone company in Rocky Mount for $1.60 per hour “because the
benefits were so impressive.” The company implied he would have his retirement
benefits for life, he said.
He retired in 1998, and has since developed health problems, including a recent
stroke which left him with a crushed knee. Cooper, who qualifies for Medicare,
is concerned about the cost of supplemental health insurance and the life
insurance he will lose, which he said adds up to $77,000.
“I come home from rehab and there's the letter in the mail, ‘We're gonna cancel
your insurance,'” he said.
Anne Wilkinson, a single mother who was recently treated for breast cancer, also
said the main reason she went to work for the telephone company in 1971 was to
ensure a secure future for herself and her daughter.
“I thought, ‘This is what I need, being a single parent, because I have benefits
down the road,'” said Wilkinson, who retired in May. “Now they're all gone.”
George Speight, who worked in Rocky Mount until retiring in 1999, said he is
losing $44,000 worth of life insurance and is upset the company did not give
retirees the option of converting that to their own private policies.
“If it ain't against the law for them to do that, it should be,” Speight said,
noting retirees from other companies are facing similar issues. “This is not
just an EMBARQ thing. This is a corporate thing that's happening in America.”
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