The Chrysler Group announced on March 16 that it is making changes to its health care payment structures for executives and management.
"We all have to do our part going forward," said Chrysler Group president and Chief Executive Officer Tom LaSorda. "And we have to do it in a way that is innovative, competitive, equitable and provides a long-term solution. Our solution addresses the need to be competitive and recognizes that, while employees need to pay more for their health care, cost increases should be borne equitably, based on an employee's ability to pay," he explained.
The new plan calls for the top executives to be responsible for up to 100% of their health care premiums in 2007. The average executive will contribute an additional $1,500 while mid-managers will see an increase of $450, according to a statement issued by the company.
Chrysler Group's health care costs have risen 100% since 2002, with the average annual total health care cost for each salaried Chrysler Group employee, regardless of job or income level is about $11,000. Of that total, the average salaried employee pays about 27% of that cost, or roughly $3,000 per year in pre-tax premiums, co-pays and deductibles to their service provider. On average, that means Chrysler Group is spending about $8,000 per salaried employee for health care. Under the new structure salaried employees will now be responsible for 31% of their health care costs.
"Chrysler Group must continue to drive down health care costs in order to sustain our profitable growth in a market that is intensely competitive," added LaSorda. "The market will not allow car makers to raise vehicle prices to absorb these additional expenses. Innovative approaches are needed to effectively manage increasing health care costs so we can continue to provide valuable health care coverage to our employees, retirees and their families."
Chrysler Group today also announced changes to health care benefits for pre- and post-age 65 retirees.