Many Fortune 500 businesses have made significant changes to employee benefits in the past year, and the majority of these changes are detrimental to the workforce. Numerous big businesses have made the decision to reduce employee benefits, such as healthcare, 401(k), and pension plans. When Verizon revealed in 2005 that it was freezing its pension scheme, the news went viral. Many businesses thereafter adopted defined contribution plans in place of defined benefit plans, following suit in the years that followed. General Electric ultimately decided to freeze the biggest pension fund in the country as a result of this trend. In an effort to save expenses, other businesses, such as AT&T and Kaiser Permanente, have chosen to focus on retiree healthcare benefits. A completely subsidized retiree healthcare plan was replaced by a fixed subsidy for Kaiser Permanente, with employees bearing the bill if the subsidy is insufficient to pay costs.
This brings us to AT&T. According to Reuters, AT&T’s cost-cutting effort is expected to result in 15% of AT&T employees losing their jobs. AT&T is attempting to reduce spending after taking major losses during the pandemic.
Will AT&T cut healthcare benefits? To get a better look at what a healthcare cut at AT&T might look like, let’s take a closer look at AT&T’s recent cuts.
AT&T previously stated in a memo that they would reduce benefits for 2021 & 2022. Employees who waited until after 2022 to retire were hit the hardest, as they lost all medical coverage typically given to retirees. AT&T will no longer supplement monthly premiums for medical and dental. The cuts may not have affected all employees since they happened in the past.
Following their notification to staff members that they will no longer be providing a Healthcare reimbursem*nt account for retirees who leave their jobs after January 1st, 2022, AT&T has made this announcement. Currently, an AT&T healthcare reimbursem*nt account covers items like out-of-pocket expenses, supplemental coverage, and incremental coverage. The HRA credit is valued $2,700 for an employee and $1,500 for an eligible dependent, per AT&T's Summary Plan description. The annual benefit, if fully utilized by the employee, would come to $4,200. This may save an individual and their family over $84,000 over the course of 20 years.
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During the epidemic, AT&T was not the only firm to reduce benefits. History repeatedly demonstrates that during a recession, businesses would cut back on or stop providing benefits. This was evident during the Great Recession of 2001, when Ford, General Motors, Charles Schwab, and Goodyear Tire & Rubber all halted or reduced their employer match initiatives. The same thing occurred in 2008; according to Forbes, about 20% of businesses with more than 1,000 workers cut back on or stopped making 401(k) contributions. Regrettably, the present recession caused by the coronavirus outbreak appears to be perpetuating that tendency. CNBC reports that 8% of businesses have halted or lowered their 401(k) contributions just this year. Prominent corporations such as ExxonMobil, Marriott Vacations Worldwide, and Amtrak have all halted their 401(k) matching initiatives. Employees at ExxonMobil experienced a loss of up to 7% in corporate match, which significantly hampered their capacity to save for retirement.
Sources:
Santone, Angela. “AT&T: Updates to Your Retirement Benefits.” AT&T Memo, AT&T Inc., 15 Dec. 2020
“The Retirement/Transition Guide for Chevron Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020,https://energy.theretirementgroup.com/Chevron-guide-download-google
AT&T Nonbargained Summary Plan Description, 2020
Khan, Shariq. “Exclusive: Chevron to Cut up to 15% of Staff amid Restructuring – Reuters.” U.S., Reuters, 27 May 2020,
Kumar, Jennifer Hiller, Devika Krishna. “Exclusive: Chevron Workers Face Demands to Reapply for Jobs under Global Restructuring – Sources | Reuters.” IN, Reuters, 8 Oct. 2020,
Lacurci, Greg. “Covid Pandemic Led Thousands of Businesses to Slash 401(k) Contributions.” CNBC, 17 Dec. 2020, https://www.cnbc.com/2020/12/17/covid-pandemic-led-thousands-of-businesses-to-slash-401k-contributions.html
Tretina, Kat. “What To Do If Your Employer Suspends 401(k) Matching Contributions.” Forbes, Forbes, 10 Apr. 2020, https://www.forbes.com/sites/advisor/2020/04/10/covid-19-employers-suspending-401k-matching-contributions/#7a48068b285f.
If you have questions about a potential AT&T surplus or would like more information you can reach the plan administrator for AT&T at p.o. box 132160 Dallas, TX 75313-2160; or by calling them at 210-351-3333.
