Heinz trims retiree health care contribution

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Add Arnold Waldo of Carrick to the list of people disappointed with recent changes being made at the H.J. Heinz Co.

Mr. Waldo, 82, who retired from the Pittsburgh food company in 1985, received a letter in late November notifying him that Heinz was reducing its contribution to a retiree reimbursement account used to cover certain medical expenses, such as co-pays for doctor visits and health insurance premiums.

"Beginning in 2014, Heinz will contribute $1,093 per year, per household to your RRA," the letter dated Nov. 21 said.

The cut, not the first to the retiree benefit, takes the level that Heinz is contributing to the account down from $3,500 per year, Mr Waldo said.

The company confirmed that it has made changes recently, although it did not say how many people were affected.

"Heinz is committed to offering programs that are valuable and affordable for both employees and retirees. Heinz recently announced a reimbursement adjustment for a certain group of retirees in order to provide a more consistent contribution level across the vast majority of our Medicare-eligible retirees," said Michael Mullen, senior vice president of corporate and government affairs, in response to a query.

He did not say what was inconsistent about the previous reimbursements.

The retiree reimbursement account is separate from the pension program for Heinz retirees, Mr. Mullen confirmed, and is funded independently by the company.

Heinz was acquired earlier this year by a joint venture of 3G Capital and Berkshire Hathaway. Since then, the company has trimmed jobs and announced plans to close three North American plants, while it shifts work to other plants. The company, which needs to pay off billions in debt associated with the sale, has said the goal is to operate more efficiently and position Heinz for growth.

Although the cut to the retiree reimbursement accounts comes under the new management, it's not the first change that the Pittsburgh company that once operated a plant on the North Side has made to Mr. Waldo's health coverage.

In 2010, he said, Heinz stopped providing health insurance and created the retiree reimbursement account instead. The company started with a $7,000 contribution the first year to help with the transition and then moved to the $3,500 level.

Nor is Heinz the only company to reduce retiree health benefits. Research from Towers Watson/ISCEBS released two years ago found 60 percent of employers that offered retiree medical plans were considering changes for 2012 or 2013.

There's not a lot of data specifically on how companies are handling contributions to retiree reimbursement accounts, said Paul Fronstin, director of health research, for the Washington, D.C.-based Employee Benefit Research Institute. He said the use of such programs has helped businesses avoid coping with swings in health insurance costs. Workers get a lump sum and then choose how to best spend it.

"Employers have moved in this direction to get cost certainty," said Mr. Fronstin.

Mr. Waldo recently switched from Highmark insurance to UPMC coverage because he got a lower price.

He worked at the Heinz operation on the North Side for 28 years. He started when he was 20, left for military service for awhile and then returned. He retired as a supervisor.

He has good memories of the Heinz family who were a presence in the early years and of former chairman and CEO Anthony J.F. O'Reilly. He doesn't have any animosity toward the executives who ran Heinz for years, he just doesn't like this deal.

"I feel that they should stand behind the moral obligation of the preceding owners of this company and maintain the program."

Teresa F. Lindeman: tlindeman@post-gazette.com or at 412-263-2018.

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