Arconic to end retiree health care
Company cites costs, low participation
Arconic will terminate its preMedicare medical and prescription coverage for retirees at the end of this year, a move the company said will cut costs amid low participation in the program.
“Many factors contributed to this decision, including more consistent benefit offerings and low enrollment,” stated a letter announcing the changes. It was sent to employees and retirees late last month. “This is one change we are making to help control costs.”
A spokesperson for the New York-based manufacturer, which split from Pittsburgh-based Alcoa in 2016, confirmed the company had informed program participants it will end coverage on Dec. 31.
“Arconic regularly reviews our benefit programs to ensure they are cost-effective and allow our business to remain competitive,” said the spokesperson, Justin Valce, in a written statement.
Those enrolled in the program can replace the company-sponsored insurance by purchasing health care coverage through the individual marketplace created by the Affordable Care Act at healthcare.gov or 1-800-318-2596.
Monthly deductions from paychecks and pensions payments to cover the costs of Arconic’s health care will cease at the end of December, the company said.
Arconic declined to say how many retirees would be affected or
how much the company expects to save. But it stated in the letter that about 35 percent of eligible Arconic retirees decided to enroll in the company’s program, “with the remainder finding preferable coverage elsewhere.”
Arconic employed about 20,600 nonunion employees in 25 countries worldwide at the end of 2017, according to regulatory filings, and about 7,900 non-union employees in the United States.
The decision comes as more employers confront ways to shoulder increasingly expensive health care costs for retirees and employees. The costs were also dragging on Arconic, a relatively new firm created in November 2016, when Alcoa split into two companies.
The mining, refining and smelting businesses maintained the Alcoa name, and Arconic now manages the businesses that make aluminum and titanium parts for the aerospace, automotive and other industries.
The initiative was intended to lift stock prices of both companies by segregating the upstream business, plagued by low commodities prices, from the downstream businesses. Arconic took on all of Alcoa’s debt load.
Arconic announced in January it would freeze defined benefit pension plans for all 7,900 salaried and nonunion hourly employees, effective April 1. Arconic said it expects to save $50 million in pre-tax pension-related expenses in 2018.
On Monday, Arconic announced it would sell its aluminum-processing plant in Texarkana, Texas, to Ta Chen International Inc., a U.S. subsidiary of aluminum and stainless steel distributor Ta Chen Stainless Pipe Co.
Ta Chen, a Taiwanese company, said it will spend up to $350 million to buy the facility from Arconic, in a deal expected to close by the end of the year.
Arconic stock closed on Thursday at about $22 a share, down close to 20 percent in 2018.
Daniel Moore: dmoore@post-gazette.com or 412-263-2743.