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Association of
Ameritech/SBC Retirees
Meeting of AT&T HR Management/AT&T Retiree Coalition April 27, 2006 San Antonio, TX
A meeting was held in San Antonio, Texas by leaders from the four major retiree associations representing retirees of the various ATT companies.
In attendance from AT&T Management was HR Benefits VP Sue Colburn with four of her associates (Marty Webb, Debbie Trammell, John Brockman, Jeff Mains) plus Pam Medina of Human Resources Policy
Also in attendance were representatives from the four major ATT retiree associations. Bruce Beckman and Chet Przybyslawski represented the Association of Ameritech/SBC Retirees, Inc.
As part of the discussion, a series of questions regarding benefits were posed to ATT. The following is a synopsis of Q&A that would be of importance to you. I have retained those questions pertaining to Legacy ATT transition issues for retirees and managers simply because if you are being questioned by “ATT” friends as I am, this may be of value. -Bruce Beckman
Meeting Questions and Issues:
1) AT&T Medical Plan: What is the plan with regard to medical – will legacy AT&T active and retired managers get the new medical plan?
Answer: Legacy AT&T active managers and management retirees who retired post 3/1/90 will have the opportunity to enroll in the AT&T Medical Plan (“new medical plan”). In addition, HMO’s will be offered as an alternative where HMO’s selected by the Company are available.
2) Mandatory Portability Agreement: How do employees know how to file for consideration under MPA and have you communicated this to them?
Answer: Upon being re-hired, if the individual discloses they have prior service, they are instructed to contact the pension service center. Also, the Summary Plan Description for the nonbargained pension plans outlines MPA and gives the participant the information necessary to begin the process. (Please remember that the MPA still exists and so if any of you are rehired, the MPA may have an impact. - Bruce)
3) EPR: Has a decision been reached on rehiring retirees that took EPR?
Answer: The decision has been made that we will continue our current policy of restricting the hiring of EPR retirees. (AASBCR has recently sent a letter to Randall Stephenson regarding this matter.-Bruce)
4) Life Insurance/Viatical Settlements: Was reading in the 2004 Form 5500 that we provide for this – are these available and how have we communicated this?
Answer: The Company’s life insurance plans permit the insured participant to access his life insurance proceeds prior to death under two separate methods (both methods require the participant to be certified as being terminally ill). First, the plan permits, where required by law, policy assignments to a third party Living Benefits Company for value (i.e. viatical assignments). The viatical assignment results in the insured obtaining only a portion of his life insurance proceeds as a consequence of the discounted prices that are typically paid by Living Benefits Company. Alternatively, the Company sponsored life insurance plans also offer accelerated death benefits. Unlike viatical assignments, the accelerated death benefit approach permits the insured access to a portion of his insurance proceeds without discounting the amount that is ultimately received by the insured and his beneficiaries. The amounts payable as an accelerated death benefit are paid directly by the life insurance company but vary depending on the regional life insurance plan and the insured’s status as either bargained or management. Please see the attached excerpt from the PTG life insurance SPD that explains viatical assignments and accelerated death benefit payments. For example, the AT&T Medical & Group Life Insurance Plan permits a minimum accelerated death benefit amount equal to the greater of 25% of the total life insurance benefit or $1,500 (maximum amount equal to the lesser of 75% of the total life insurance benefit or $1,000,000). Whereas, the Ameritech Group Life Insurance Plan permits a minimum accelerated death benefit amount of $5,000 and a maximum amount of 50% of the basic life insurance benefit and 100% of the supplementary life insurance benefit.
5) Medicare Part D: How much do we expect to be reimbursed this year and what are our plans, if any, to share that with retirees? Is this amount referenced in the Annual Report?
Answer: Page 77 (table-lower right column) of the 2005 AT&T Annual Report, documents future expected Medicare subsidy payments. For 2006, that subsidy is estimated to be $90M. This subsidy estimate is taken into account when developing medical plan contributions. Therefore, the reduced costs from the Medicare Act are shared with retirees through reduced contributions.
6) Prescription Drugs: Retirees are reporting that Caremark will not ship the drugs without a credit card on file – used to get billed – what happened? This delays the order by many days.
Answer: Caremark does ship drugs without a credit card on file. Prior to 2005, the drugs would be shipped provided a $100 credit limit was not exceeded, including the drugs that were being ordered. Effective in 2005, that limit was increased to $200. If the order exceeds $200, a credit card or some other method of payment is required. (Until my deductible is met, my drug shipments are way over $200. -Art)
7) Prescription Drugs: How will retirees be able to prove that they met the actuarial equivalency test – do they need to keep a letter that was sent to them last year indefinitely?
Answer: Retirees are strongly encouraged to retain their equivalency test letters for future reference. However, Hewitt will fulfill future requests for the letters as well.
8) Health Savings Account with Exante: Exante is saying that you cannot write a check to yourself – is this true?
Answer: Participants may write themselves a check to reimburse any qualified medical expenses. However, the checks cannot be used to refund any excess contributions to the account that exceed the IRS limits. A refund form, available at the bank, must be completed in the same tax year by the account holder to request a refund. Once these funds are refunded to the participant, the bank will report the corrected amount to the IRS. Otherwise, taxes will be owed on amounts contributed to the account which exceed the allowable contribution amount.
9) Cash claims v. Benefit Obligation: Page 73 of the Annual report – can you explain the differences in the cost of real claims v. the reported benefit obligation?
Answer: The Benefit Obligation represents the total amount for Post Retirement Benefits. This number represents current and future obligations for benefits in retirement of both current retirees and current active employees who have yet to retire. The Benefits Paid entry represents the cash outlay during the year to pay for retiree benefits.
10) Survivor benefit in Pension Plan: The 5500 says that a survivor benefit is immediately payable if the employee has 15 or more years of service but is payable at normal retirement age if the employee has less than 15 years of service. Has this been communicated and how would an employee and more importantly their survivor know about this? (This question was posed by the Pac Bell retiree Representative and so the qualification level may be dissimilar to others. However, it is critical we understand that a Widow of any individual who worked for Ameritech for a period of time which qualified the employee for a vested pension is qualified for the survivor portion. This may be very important to some friends.- Bruce)
Answer: The most recent version of the Summary Plan Description for the PTG Pension Plan makes reference to the 15 year period of service, but not specifically with respect to the timing of commencement of the annuity for the surviving spouse. That being stated, the pension plan is being administered by our third-party administrator (Fidelity) consistent with the official plan document and the information provided in the Form 5500. We are currently in the process of updating our summary plan descriptions for our pension plans. We will include the requested information in the next pension SPD that we publish (subject to review by our legal staff). It should be noted that our Survivor Benefits Unit (SBU), which is currently Fidelity, routinely informs the surviving spouse with respect to his or her pension rights once the SBU is contacted and informed that a participant has died. As such, while the surviving spouse may not be aware of the rules surrounding the timing of the commencement of the pension benefit prior to contacting the SBU, they are quickly made aware once they establish contact with the SBU.
11) Death Benefit Info: This is not handled well by the Survivor Benefits Unit – they usually don’t even mention it unless asked.
Answer: The Survivor Benefits Unit (SBU) has a checklist that it uses in order to ensure that the beneficiaries of the deceased participant are informed and obtain all of the benefits to which the beneficiaries are so entitled. The right to death benefits is included on that checklist. The SBU wants to make sure that the beneficiaries are knowledgeable of and receive each and every benefit that is due to them. As such, we believe that the SBU is properly addressing the issue of death benefits with the beneficiaries of our deceased participants. If there are individual situations in which it is believed that the SBU has not conducted itself appropriately, we would like to obtain further information so that we can investigate and address those individual situations.
12) Concession: Will AT&T retirees get SBC at Home? When will they get it?
Answer: We are currently reviewing the concession policies at both companies to determine our path forward.
13) Concession: Does the discount apply to Calling Card Calls?
Answer: No, it does not.
14) Concession: If you move from one Out of Area address to another – do you get to continue the 600 minutes?
Answer: No, you do not. (This is very important to those of you who had qualified for the 600 minutes.-Bruce)
15) Coordination with Medicare: Exactly what charges are applied to the deductible – the billed charges, the covered charges, or what?
Answer: When Medicare is the primary coverage for the retiree, the Medicare Allowable Amount is the amount applied to the deductible and out-of-pocket maximum.
16) Out Of Pocket Maximum: The fact that the OOP maximum is limited based on salary at the time of retirement is crazy – retirees do not make the income in retirement that they made as an active employee.
Answer: Since AT&T does not have access to all of the potential income a retiree may have in retirement (savings, investments, social security, employment, etc.), utilizing the individual’s income at retirement was the best alternative.
17) Late year notice of change in deductibles and Out Of Pocket maximum: When the deductibles and OOP max changes, and notice is given after Annual Enrollment, the retiree should be able to reselect their coverage option.
Answer: When setting the OOP maximum and the deductibles, the plan looks to the IRS established amounts, which set thresholds that have to be used by the plan so that plan participants can participate in a health savings account. The IRS did not set these amounts for the 2006 plan year until late in 2005. In the future, if deductibles are increased following annual enrollment, participants will be permitted to adjust their coverage option to change their enrollment election. This may be done as long as administratively feasible, but must occur prior to the end of the year.
18) Engers Lawsuit: This lawsuit was listed in the Proxy under Other Business Matters last year – why was it dropped out – not mentioned, this year? (This is a lawsuit between Legacy ATT Management and Retirees and the legacy company. It deals with the conversion of their Defined Benefit Pension Plan to a Cash Balance Plan.-Bruce)
Answer: This lawsuit was in the AT&T Corp. proxy last year and, as a result of the combined size of the merged company, it is not required to be disclosed in the new AT&T’s annual report.
19) What are we looking at for next year?
Answer: It is our intent to migrate the AT&T active managers and certain management retirees (retired 3/1/90 and later) to the AT&T Medical Plan. In addition, there may be some other modifications to that Plan (for example, potential changes in deductibles and co-pays) in accordance with U.S. Treasury regulations governing HSA’s.
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