LETTER 27

VER Medical Coverage

 

Mr. James M. Parent

Assistant Directing Business Representative

District Lodge No. 26

I.A.M.A.W., AFL-CIO

365 New Britain Road

Kensington, Connecticut 06037

 

Dear Mr. Parent:

This is to confirm the understanding and agreement reached between the Company and the Union concerning Voluntary Early Retirement (VER) Medical Coverage for employees who terminate their employment after the effective date of this Agreement and are eligible to retire under the terms of the retirement plan referred to in Article 21 of the Agreement (hereafter referred to as “retirees”).

.It is agreed that VER medical coverage will be offered to all new (future) retirees as follows:

1.      Eligibility for VER medical coverage will remain the same as stated in the “Summary Plan Description—Medical Benefits for Hourly Paid Represented Employees” referenced under Article 22 (Group Insurance and Savings Plan) of this contract.

 

2.      The hourly retiree VER medical coverage available will be identical to the salary retiree VER medical coverage and will be subject to the same medical plan changes which affect the salary retirees.

 

3.      The cost (premium) of the hourly retiree VER medical coverage will be calculated on an annual basis and will be based on the melded (average) utilization experience of all domestic hourly retirees, covered spouses and covered dependents participating in this VER medical coverage.

 

4.      For those retirees who terminate their employment prior to November 1, 2007, the Company will offset (subsidize) a fixed portion of the cost of VER medical coverage, for those retirees who elect to participate, based on years of continuous service at retirement per the following schedule:

 

 

Company Contribution Toward

VER Medical

Years of Continuous Service At Retirement

Retiree or Dependent Only

Retiree +1 or Family

After 10

$1,250

$2,500

For Each Year 11 through 20

Add $100 Per Year

Add $200 Per Year

For Each Year 21 through 30

Add $150 Per Year

Add $300 Per Year

 

5.      The retiree, if they elect VER medical coverage, will pay an amount equal to the annual premium from Paragraph 3 above, minus the fixed Company contribution calculated using the schedule in Paragraph 4 above for this coverage.  For example, if the melded annual premium for hourly retiree VER medical coverage is $6,000 for a retiree only and that retiree has 25 years of continuous service at retirement, the retiree’s cost is calculated as follows:

 

Melded Annual Premium =

$6,000

 

 

Minus Company Contribution

-$3,000

 

[$1,250+(10 x $100)+(5 x $150)]

 

$3,000

 

Retiree’s Annual Cost

 

6.           There will be no Company subsidy for VER medical coverage for any employee who terminates his or her employment after October 31, 2007.  Any employee who terminates after October 31, 2007, will have access to the VER medical coverage and will pay the full cost at the group rate.

 

7.           Eligibility for group life insurance for retired employees, pursuant to the terms of the Group Life and Disability Insurance Plan of United Technologies Corporation, will continue for employees who terminate their employment prior to November 1, 2007.  Group Life Insurance for retired employees will not be available to any employee whose employment terminates after October 31, 2007.

 

Sincerely,

James R. Miller

Vice President, Industrial Relations

Accepted this 6th day of December 2004