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Update on Health Care Reimbursement Account (HCRAR)

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Update on Health Care Reimbursement Account (HCRAR)


Dear AT&T Retiree and Long Term Disability Beneficiaries

As you know, in bargaining with AT&T this year the Company was unsuccessful in its attempt to shift a portion of retiree health care cost to you.

CWA was successful in negotiating a separate Health Care Reimbursement account (HCRAR) to cover the cost of health care premiums. The account will be funded by the Company to offset the premiums owed for retiree health for those who retired or commenced Long Term Disability (LTD) benefits on or after March 1, 1990.

You should have received, or will receive, a new letter from the Company that supersedes the May 20, 2002 letter and outlines the new accounting and reimbursement process for the HCRAR accounts. This is a result of further discussions between the Union and the Company.

Retirees and LTD beneficiaries will now have the following options:

1) Do nothing and when you receive your pension check the stub will be used to reflect monthly the health care premium and the associated HCRAR reimbursement. (These reimbursements are not taxable Ė see attached)
2) Request to receive a monthly bill, make payments and seek reimbursement through the HCRAR account.
3) Defer medical coverage if you have other coverage. A HCRAR account is established and can be utilized for other medical expenses. You have the ability to change this option if you have a qualifying event take place and need to seek coverage.

Although the primary intent of the HCRAR account is to offset the health care premium it can also be used for co-payments, deductibles, out of pocket expenses etc. If used this way however the retiree would be required to pay the health care premium out of pocket.

Retirees and LTD participants who donít receive a monthly pension check will receive monthly statement that will reflect the amount of the premium as well as the amount deducted from the HCRAR account.

All post March 1, 1990 retirees and LTD participants will receive a quarterly statement as well reflecting the HCRAR account status.

In addition, you have the ability to switch options during the life of the Agreement simply by contacting the Benefit Direction Enrollment Center (BDEC).

These options are a result of the Unionís continued effort in trying to force the company to do the right thing for our retirees and CWA will continue to fight on behalf of all retirees. While we have reservations with the process the company has finally selected we will continue to challenge any and all contract violations.

The contract with AT&T expires in November 2003. We fully expect the Company to make another run at shifting health care costs to retirees. We will, again, be looking for support from all retirees in our efforts to beat back any such attempts at shifting health care costs. Together we can make the difference.

In Unity,

Ralph V. Maly, Jr.
Vice President CWA



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