Highlights of the Tentative Agreement - VZ-East          2003

You will receive more details, including information from your local bargaining table, from your local.

Job Security

• No movement of work for five years; the .7% restriction is maintained.
• The Job Security Letter (JSL) continues for current employees. New hires are not protected by the JSL.
• Job security issues may be discussed during the annual April discussions; however, the Company cannot bargain to impasse.

Term

• 5-year contract.
• Discussions in April 2004, 2005, 2006, 2007 about job security issues and wages (in addition to the guaranteed wages). All contract terms and conditions are protected and cannot be modified unless agreed by both parties.

• No strikes, no lockouts, no unilateral imposition of new contract terms.

Wages and Compensation
Over the term of the contract, with the guaranteed annual increases and expected cost of living adjustments, the wage increase will equal 10.6%. Elements of the wage increase are:

• 3% lump sum upon ratification, payable in October.
• 2% guaranteed minimum annual increase in August 2004, 2005, 2006, 2007, applied to all steps of the wage schedules.
• A Cost-of-Living Adjustment (COLA) payable in 2006 and 2007. The 2006 payment equals one-half the change in the CPI from May 2004 to May 2006, minus 4%. The 2007 payment equals one-half the change in the CPI from May 2006 to May 2007, minus 2%.
• Additional wage increases will be discussed in April 2004, 2005, 2006 and 2007.
• Click here for an online wage calculator to see how the guaranteed increases and potential changes to inflation will affect you.

Corporate Profit-Sharing
The Corporate Profit Sharing Plan (CPS) is continued with minimum distribution (subject to prorating for partial years), as follows:

• 2004: $500 minimum
• 2005: $550 minimum
• 2006: $600 minimum
• 2007: $650 minimum
• 2008: $700 minimum

Pension
The lump sum cash out option is preserved. Between October 1, 2003, and December 31, 2003, there will be a special incentive window when pension bands will be increased 5%. At the end of the period, the incentive increase will end. The lump sum cashout will be available during the incentive window. Cashouts will be available again on November 1, 2004, and will remain in effect thereafter, through the term of the contract. Between November 1, 2003, and August 2, 2008, pension bands will increase 11.46% on a compounded basis. Annual pension band increases are as follows:

• 10/1/03: 5% incentive window; expires 12/31/03
• 11/1/04: 2% permanent pension band increase
• 10/1/05: 3% permanent pension band increase
• 10/1/06: 3% permanent pension band increase
• 10/1/07: 3% permanent pension band increase

Voluntary Termination Bonus

• Employees who leave voluntarily pursuant to IPP/ISP or Enhanced IPP/ISP offering during the term of the agreement, are eligible for a lump sum payment of $10,000 in addition to any amount for which the employee is otherwise eligible, plus six months of medical coverage if not otherwise eligible.

Health Care and Other Benefits

• No premium sharing for actives or retirees.
• Premium surcharge of $40 per month is imposed for spouses or partners of active employees who have access to health insurance coverage through their employers. If the spouse's income is less than $25,000 or if their premium is more than $900 annually ($75 a month), then the employee is exempted from paying the surcharge. This is to encourage workers to have their spouses' employer pick up a portion of the total medical costs for their families.
• A new PPO arrangement will be integrated with the current MEP indemnity plan. Co-pays will replace 80/20 cost sharing when a PPO doctor is used. This new benefit is a result of the work of the joint Advisory Committees on Health Care, a successful union-management team that developed a win-win approach to health care cost control while assuring quality care.
• New preventive care benefits will be included in the MEP plan for the first time in the NY/NE contract and are updated in the Mid-Atlantic, as well as updated in the HCN and MCN plans. The new benefits include coverage of one physical exam annually for individuals over age 50, and coverage of one complete regimen of immunizations and flu vaccine annually for children and adults.
• Co-pays are introduced for the PPO component of the MEP, and MEP deductibles and out-of-pocket maximums are increased in 2006 and 2008 as follows.
  • Co-pays for MEP (when PPO doctor is used):
    • 1/1/04: $10
    • 1/1/05: $15
    • $5 co-pay for Medicare recipients continues throughout contract
  • Deductibles for MEP*:
    • 1/1/06: $200
    • 1/1/08: $250
    • Family maximum is 2.5 times single deductible
  • Out-of-pocket maximum for MEP (applies to NY/NE only)*:
    • 1/1/06: $650
    • 1/1/08: $700

* No increases in the MEP deductible or out-of-pocket maximum will apply if an employee lives outside the MEP-Indemnity PPO vendor's standard service area and is not eligible for HCN or MCN coverage.

• Rx out-of-pocket maximum for MEP (applies to NY/NE only):
  • 1/1/06: $250
  • 1/1/08: $300
• Office visit copays in the HCN plan for NY/NE are increased to $15 effective 1/1/2005 (Mid-Atlantic MCN copays are already at $15.)
• Minimum standards for HMOs have been introduced in the contract:
  • office visit copays cannot exceed $10;
  • emergency room copays cannot exceed $50;
  • no participants will be required to pay any premiums toward HMO coverage during the term of the contract.
  • HMOs will be restricted from making any benefit changes except during the annual renewal process.
  • The Company must first notify the ACHCs of any changes to HMO benefits and the ACHCs may offer recommendations.
• Effective January 1, 2004 a new pharmacy network will be introduced for the prescription drug plan. The new arrangement does not use an active formulary or preferred drug list.
  • Mail order co-pays, for 90-day supply:
    • Generic: the lesser of $8 or the Discounted Network Price (DNP)
    • Brand with no generic equivalent: the lesser of $12 or DNP
    • Brand with a generic equivalent: the lesser of $20 or DNP
  • Retail prescription co-pays, for 30-day supply at in-network pharmacy:
    • Generic: 15% of Discounted Network Price (DNP) up to $25
    • Brand with no Generic Alternative: 20% of DNP up to $40 maximum
    • Brand with Generic Alternative: 30% of DNP up to $50 maximum
  • Retail prescription co-pays for 30-day supply at an out-of-network pharmacy:
    • $50 deductible
    • Generic: 15% of retail cost with maximum $25.
    • Brand with no generic equivalent: 20% of retail cost up to $40 max.
    • Brand with generic equivalent: 30% of retail cost up to $50 max.
• Additional medical benefit improvements including nutritional counseling to be added to obesity treatment; hearing aid reimbursement of $1,000 available on an in- or out-of-network basis; infertility treatment covered on an in- or out-of-network basis up to a lifetime maximum of $20,000 (for NY/NE only).
• The dental plan is improved by covering dental implants up to $1,000 per implant and up to $1,500 per year. The plan will also reimburse for services associated with finishing crowns.
• If legislation is passed which changes health care benefits, the parties will discuss; there will be no diminishment of benefits.