Arconic to cut health care benefits to retirees

Arconic, the Alcoa spinoff with roots in the Alle-Kiski Valley, told retirees in recent letters it is making drastic cuts to their health care benefits and eliminating life insurance it had provided.

Arconic told retirees about the move in letters dated March 29.

Arconic has about 300 employees in a technical center in Upper Burrell and employed more than 1,700 in the Pittsburgh area when it split from Alcoa in 2016. The iconic aluminum maker kept its signature business, and Arconic took over its aerospace and automotive components.

“Arconic’s leadership team has made the difficult decision to reduce the company-provided Medicare Exchange HRA contribution,” Neil Marchuk, Arconic’s executive vice president of human resources, wrote in letters to retirees obtained by the Tribune-Review.

A health reimbursement arrangement provides assistance for medical expenses not covered by Medicare.

Arconic will be reducing its contribution by 50%.

According to figures provided in the letter, a person who received $1,549 in 2019 will receive $775 in 2020; someone who received $2,671 in 2019 will receive $1,336 in 2020.

“We recognize the impact these decisions will have on you,” Marchuk wrote in the letter. “However, we believe these changes are necessary to strengthen the company for the long term.”

The company plans to eliminate company-provided life insurance it had given to retirees, effective May 1, citing the same reason for reducing its contribution to the health reimbursement program. Those policies can be converted to individual policies, Marchuk wrote in the letter.

Both communications are form letters addressed to “Arconic retirees.”

“Arconic regularly reviews its benefit programs to ensure they are cost-effective and maintain competitiveness of the businesses,” a company spokesman wrote in a statement emailed Wednesday to the Tribune-Review. “That said, management had to make these difficult decisions regarding benefits for non-union retirees.”

The moves follow a management overhaul that resulted in Chairman John Plant being named chief executive officer in February, ousting Chip Blankenship just a little more than a year after he took the helm at the embattled manufacturer.

Plant is the company’s fourth CEO in less than two years.

In January, Arconic backed out of late-stage talks to sell itself to Apollo Global Management, an announcement that sent shares tumbling the most in eight months.