Tri-Cities largest single employer cuts retiree benefits to save $4M a year

Pacific Northwest National Laboratory medical benefits for retirees are being reduced, its retirees and 6,400 employees are being told this week.

The national lab based in Richland is operated for the Department of Energy under a contract with Ohio-based nonprofit Battelle. The lab is the Tri-Cities largest single employer.

The change to benefits is expected to save $4 million annually, which can be put to other uses.

The new policy comes as PNNL has been furloughing employees due to a loss of federal funding, but lab officials are not tying the retiree benefit cuts to new federal policies under the Trump administration.

Battelle historically has had a trust fund to pay the costs of the retiree benefits that now are being cut. But the fund has been exhausted, and the lab has been covering the costs, according to a PNNL fact sheet on the change.

“Following a thorough evaluation of the financial demands required to sustain these programs — alongside other strategic priorities across the lab, including the need to carefully manage overall benefit expenses — the lab leadership team has made the difficult decision to discontinuesome of our retiree benefits,” the fact sheet said.

The changes to retiree benefits put them more in line with the practices of most employers, according to the sheet.

“As health care costs and benefit obligations have grown, the longstanding funding source for retiree coverage has been depleted,” according to a statement from PNNL. “After careful review, Battelle has made the difficult decision to discontinue certain retiree medical subsides and reimbursements beginning in 2026.”

The changes will help make sure that PNNL remains “competitive, financially responsible and aligned with our mission,” the statement said.

“Extremely disappointing,” was the reaction of one retiree who contacted the Tri-City Herald when the announcement arrived in their home mailbox on Friday.

He said that the PNNL retiree compensation package had been touted as offsetting wages on the low side of the market average for PNNL workers.

The expectation of good benefits as a retiree was a key reason he did not leave PNNL for other opportunities, said the retiree, who asked that his name not be used.

PNNL health benefit cuts

Battelle has been paying part of the medical insurance costs for some employees and their dependents who retire before they are eligible for Medicare at age 65 until they qualify for Medicare. Eligibility required nonunion staff to be hired before 2012 and union staff to be hired before September 2015.

Some have 50% of costs paid by Battelle.

Retirees younger than 65 and their dependents are still eligible for the health care coverage but next year must pay the entire premium.

According to the fact sheet, that could range from $1,117 a month for the retiree only to $3,352 a month for a family based on 2025 rates.

In addition, a subsidy program called the Health Reimbursement Arrangement will provide no more annual payments to nonunion retired staff or their eligible spouses starting next year.

The plan provided an annual contribution of up to $1,200 per year, based on years employed at PNNL, for certain nonunion retired employees and their spouses to pay for some health care expenses not covered by Medicare.

Annual payments of $1,602 will continue for some retired union employees who were hired almost 10 years ago or earlier, as required by the Hanford Atomic Metal Trades Council bargaining agreement.

Also not changing are pension benefits and a dental plan for some retirees.

Employees and retirees are being notified of the changes by a staff memo, letters and emails.