Headlines about "Health plans - retiree coverage"
Gathered from the web by the editors at BenefitsLink.com.
West Virginia Considering Alternatives to Dropping Retiree Health Care for New State Employees
Excerpt: "Newly hired state employees in West Virginia would have to pay the entire cost for their health insurance after retirement under a current proposal by the state Retiree Health Benefit Trust and Public Employees Insurance Association Finance Board. West Virginia's share of Other Post-Employee Pension debt, affecting state employees, is estimated at $7 billion, and the RHBT and PEIA Finance Board is seeking alternative suggestions to eliminating retiree health insurance benefits for new hires." (The Intelligencer / Wheeling News-Register)
Visteon Seeks to Terminate Retiree Health Care
Excerpt: "Visteon Corp. has asked a bankruptcy judge today for permission to terminate its health care and life insurance plans that cover 6,650 hourly and salaried retirees, their spouses and dependents, as well as benefits for 700 potential retirees. [Visteon], in court papers, called the programs a 'crippling financial and competitive burden.' Cutting them, the company said is an unavoidable part of its cost-saving plan." (Detroit Free Press)
Emergency Retiree Health Benefits Protection Act Reintroduced
Excerpt: "Representative John Tierney (D-Mass.) has reintroduced the Emergency Retiree Health Benefits Protection Act (H.R. 1322), which would prevent employers from reducing or eliminating health benefits for retirees or their dependents. The bill has been around for years but has attracted more attention since it appeared in a pension bill last year. Under the act, employers could not make changes to their retiree health plans that would eliminate, reduce or limit benefits, increase out-of-pocket costs or make it more difficult to obtain medical care." (Watson Wyatt Worldwide)
[Guidance Overview] Options to Remove Liabilities for High Retiree Medical Costs from a Company's Balance Sheet: VEBAs (PDF)
2 pages. Excerpt: "The creation and structuring of the VEBA must fulfill a number of legal requirements all of which are normally manageable. Depending upon how the retiree medical VEBA is to be funded, there are a number of other approvals that may be required and SEC filings that must be made for companies with registered securities if the settlement agreement is a 'material agreement.' Further, the VEBA will allow for different accounting treatments of the change. If the company has securities registered with the Securities Exchange Commission, the company's accounting treatment can be verified by obtaining approval of the proposed accounting treatment through the office of the Chief Accountant at the SEC and the appropriate Counsel's office." (Haynes & Boone)
[Opinion] Failing to Fund Retirement Benefits: The Downside of 'Pay-As-You-Go'
Excerpt: "In addition to digging a deeper hole, there are three other consequences of pay-as-you-go: higher liabilities and expenses in financial statements; lost and lower investment earnings; and a weakened collective bargaining position." (Governing.com)
Salaried GM Retirees Request Bankruptcy Court Voice
Excerpt: "With a reduction in some retiree benefits by about two-thirds a possibility, a group of retired General Motors salaried employees has asked to be granted a say in the auto giant's restructuring. A Detroit Free Press story said the retiree group has asked a bankruptcy judge to appoint an official panel to represent their interests as GM reorganizes its business. 'The unfairness of hourly retirees keeping their benefits and even getting a stake in New GM to fund their health benefit trust, while salaried retirees receive no protections, also cries out for the need for salaried retiree representation,' the group's court filing said, according to the newspaper." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Retirees Can Proceed With Claim That Employer Violated ERISA in Terminating Their Health Benefits
Excerpt: "EBIA Comment: The practical effect of the Ninth Circuit's decision in this case is to open the courthouse doors to the retirees to continue pursuing their surviving claims. When the substance of those claims is considered, the issue of vesting may once again be front and center. Because welfare plans (unlike pension plans) are not subject to ERISA's statutory vesting requirement, plan sponsors are generally free to amend or terminate ERISA welfare plans. Through plan language, however, a plan sponsor may voluntarily give up its right to amend or terminate a plan benefit, in which case benefits may vest and become protected from amendment or termination. Thus, the outcome of retiree health benefits cases often depends on plan language (including the language of formal plan documents, SPDs, other participant communications, and -- as in this case -- a benefits booklet and applicable CBAs)." (Employee Benefits Institute of America)
GM Retirees Face An Uncertain Future
Excerpt: "As a last resort, pensions are somewhat guaranteed by the Pension Benefit Guaranty Corp., a federal outfit. Pensions for retirees 65 and older are guaranteed for up to $54,000 a year. Coverage is lower for younger retirees." (BusinessWeek)
Retirement When Union Pension Collapses
Excerpt: "Gregg Trunell, 43, began planning for an early retirement even before he began his career. Over the years, he and his wife put the maximum amount into their 401(k) plans, thousands more into IRAs and set 2011 as a target date for retiring. But now all bets are off. Trunell's union pension fund took a hit when the stock market plunged." (National Public Radio)
Court of Appeals Hearing is Friday on Treatment of Indiana Pension Fund as Bondholder in Chrysler Deal
Excerpt: "A U.S. Court of Appeals agreed on Tuesday [June 2] to hear a challenge to Chrysler LLC's sale of most of its assets to a group led by Italian automaker Fiat . . . . A three-judge panel for the U.S. Court of Appeals for the Second Circuit will hear arguments in the appeal on Friday at 2 p.m. EDT (1800 GMT) in New York, according to a court order on Tuesday." (New York Times)
New York City Labor Unions Agree to Reductions in Health Benefits
Excerpt: "The agreement imposes the $50 to $100 co-payments for about one-fifth of current and retired city employees, and eliminates coverage for preventive dental care at certain offices. For most other city employees, the plan would restrict certain hospital, ambulatory and hemodialysis coverage to network providers and would implement several other administrative cost-saving measures." (New York Times)
[Opinion] GM Pension and Healthcare Promises Sucked It Down the Drain; Here Comes California
Excerpt: "[A]mong the obligations that caused GM to file for bankruptcy, two are directly related to worker entitlements. In 2003, GM sold $13.5 billion in bonds -- one of the biggest debt offerings ever -- and plowed the money into its pension fund. Then, in 2007, after the UAW went on strike, GM agreed to funnel more than $30 billion into a special trust for retiree health care. Both the pension bond and the retiree-trust obligation helped topple GM into Chapter 11 bankruptcy. Of course, they weren't the only causes." (Roger Lowenstein on Bloomberg.com)
[Opinion] A Sickening Outcome for GM's 377,000 Retirees
Excerpt: "A trust fund set up a few years ago to protect [retiree healthcare] benefits [for 377,000 retirees] -- while allowing General Motors to clean up its balance sheet --is seriously underfunded. Now, the United Automobile Workers union is about to discover that it's no better at managing escalating health care costs than GM. . . . As part of the deal, the union agreed to forgive $20 billion that GM owes to the retiree health care trust." (Joann Muller in Forbes)
General Motors Files for Bankruptcy Protection
The UAW VEBA will assume all retiree healthcare liabilities next year. In the deal the VEBA receives a 17.5% share of the company's common stock, interest-bearing preferred stock, and a $2.5 billion note. (AP via New York Times; free registration required)
UAW OKs Healthcare Benefits Reduction for GM Retirees; DB Plan to Continue
Excerpt: "[I]nstead of GM contributing about $20 billion in cash and other contributions, the new VEBA will receive a note, payable in cash, with a principal amount of $2.5 billion. The note will make cash payments of $1.38 billion, including accrued interest, in 2013, 2015 and 2017. The VEBA also will receive preferred stock in the restructured company with a face value of $6.5 billion. The stock will pay an annual cash dividend of $585 million for as long as the VEBA holds the stock. Finally, the VEBA will receive 17.5% of the common stock issued by the restructured GM . . . ." (Business Insurance)
GM Files for Bankruptcy Protection; 17.5% Ownership by VEBA Is Proposed
Excerpt: "Under the proposed restructuring, about 60 percent of the new GM would be owned by the United States, about 12 percent by the governments of Canada and Ontario, 17.5 percent by a union health trust, and 10 percent by the company's current bondholders." (Washington Post; free registration required)
[Guidance Overview] Retiree Benefits and Section 1114
Excerpt: "Although the question of whether ? 1114 applies to the modification or termination of retiree benefits that would otherwise be modifiable at will remains an open one, Judge Drain's recent decision [in the Delphi Corporation bankruptcy] is significant for several reasons. First, it adds further support to the seemingly growing consensus that ? 1114 does not apply in such circumstances. Second, it gives debtor-employers a well-reasoned treatment of the issue to follow in fighting off objections to their attempts to escape or lessen the crushing burden of retiree benefits costs, the success of which may be the difference between a successful reorganization or a failed effort. Finally, it may spur further attempts by Congress and President Obama's administration to amend the Bankruptcy Code to strengthen the protections for retiree benefits, particularly since this issue is one that will likely take center stage in future automotive and other cases." (Haynes & Boone)
UAW Health Care Trust May Own 17.5% of General Motors
Excerpt: "Under the deal struck by GM and the United Auto Workers, 17.5% of the company's shares will be owned by a union health-care trust, with an option for up to 20% over time, WSJ reports. That's down from an earlier offer of 39%. The independent trust was created as part of the UAW's contract with GM in 2007. The company puts health-care money into the trust, taking retiree health obligations off of its balance sheet while giving the union the ability to manage the health benefits." (The Wall Street Journal)
Delta Pilots Union OKs Buyout Plan
Excerpt: "Delta Air Lines Inc. and its pilots union have come to a tentative agreement on an early retirement program to eliminate an unspecified number positions. In a Wednesday memo to pilots, Delta pilots union chairman Lee Moak said eligible pilots who elect to retire could receive up to nine month pay and benefits as part of an early-exit program." (Atlanta Business Chronicle via bizjournals.com; free registration required)
[Guidance Overview] One-Time Election of Retiree Health Benefits or Increased Pay is Not Constructive Receipt
Excerpt: "The Internal Revenue Service ruled that an employee's one-time irrevocable election to waive future retiree medical benefits in favor of increased pay did not cause the employee to be in constructive receipt of income under Internal Revenue Code ? 451. IRS Private Letter Ruling 200914018 (Released 4/3/2009)." (Deloitte via BenefitsLink.com)
General Motors Labor Deal Would Cut Retiree Health Benefits Immediately
Excerpt: "Retiree medical benefits will be cut with immediate effect at the insistence of the U.S. Treasury because of GM's 'difficult financial situation.' Benefits for retirees could be cut further in 2010 and 2011 because of the 'uncertainty regarding the long-term value of the GM stock.' UAW anticipates paying retiree health care benefits in 2010 and 2011 from cash, including the $585 million dividend from preferred stock. It does not expect to be able to sell GM stock until 2012 at the earliest." (Reuters Limited via USA Today)
UAW to Own 20% of General Motors
Excerpt: "United Auto Workers leaders representing 61,000 hourly employees agreed Tuesday to accept up to 20 percent of General Motors Corp. stock -- about half of what was previously expected -- and significant concessions on labor rules and retiree health care obligations. . . . The UAW health care trust fund has agreed to accept 17.5 percent of GM's common stock, $6.5 billion of preferred shares and a $2.5 billion note, plus warrants equal to 2.5 percent of GM's stock. The UAW trust fund will receive $585 million annually in interest income on its preferred stock. The union was eligible to own up to 39 percent of GM's equity through the independent health trust fund, called the Voluntary Employees' Beneficiary Association, that will assume responsibility for retiree health care. But the lower than 20 percent stake could mean that the company is attempting to appease unsecured bondholders, who charged that the UAW was getting a better deal." (The Detroit News)
GM Bankruptcy Plan Would Use Stock Worth 39% of Firm To Fund Half of VEBA Obligation
Excerpt: "The United Auto Workers retiree health fund is set to own as much as 39 percent of the restructured GM, in exchange for giving up its claim to at least $10 billion that the company owes it. Yesterday, the union announced that it reached an agreement with GM that will reduce the company's labor costs." (The Washington Post; free registration required)
GM's Future Rests With Bondholders After UAW Deal
Excerpt: "The United Auto Workers struck a deal with General Motors and the federal government Thursday to cut labor costs, close factories and change the way retiree health care is funded. The agreement could ease one of GM's biggest problems: The cost of its work force. But the automaker is still struggling with a crushing debt that may drive it into a Chapter 11 bankruptcy reorganization. . . . The government has told the automaker to cut labor costs, close factories, shed dealers and brands, and persuade at least 90 percent of its bondholders to sign on for the stock-for-debt exchange. But thousands of bondholders are expected to shun the company's offer to take 10 percent of its stock to wipe out $27 billion in unsecured debt." (The New York Times; free registration required)
General Motors and UAW Reach Deal on Contract Changes
Excerpt: "The United Automobile Workers union said Thursday that it had reached a tentative deal with General Motors and the Treasury Department that would help G.M. cut its labor costs and reduce its obligations to a new retiree health care fund by billions of dollars, The New York Times's Nick Bunkley reports from Detroit. The U.A.W. did not release details, which must be ratified by G.M. workers. The agreement is expected to be similar to one reached last month with Chrysler, which allowed that automaker to substitute equity for up to half of the $10 billion owed to its retiree health care fund. G.M. owes about twice that amount to the fund for its workers." (The New York Times; free registration required)
Automotive Industry Salaried Retirees Join Forces to Save Pensions and Benefits
Excerpt: "More than 200,000 salaried retirees from the U.S. automotive industry have formed a coalition to fight for their benefits. The presidents of each of the four national retiree associations of Chrysler LLC, Delphi Corp., General Motors Corp. and Ford Motor Co. announced Thursday the formation of the National Automotive Coalition (TNAC). . . . [T]he salaried retirees of the four organizations are being urged to meet with their congressional representatives on a face-to-face basis to determine support for their concerns. 'We have a six-point agenda to discuss with each representative,' . . . . 'We want to know if they are for or against us.'" (Kokomo Tribune)
Bankruptcy Judge Denies Chrysler Retirees' Motion
Excerpt: "A bankruptcy judge on Thursday denied a request from a group representing Chrysler LLC's retired white collar workers to appoint an official retiree committee to take part in the automaker's bankruptcy proceedings. U.S. Judge Arthur Gonzales said that any decisions regarding the future of retiree benefits ultimately will be made by the automaker's new owners and as a result there isn't much point in the retirees group negotiating with Chrysler now." (AP via Gold Country Media)
GM Nears Crucial Deal With UAW That Affects Retiree Health Care Benefits
Excerpt: "General Motors Corp., under the direction of the U.S. Treasury, is near a deal that would cut its hourly labor costs by more than $1 billion a year and reduce its $20 billion pledge to the United Auto Workers to cover health-care obligations, said people familiar with the matter. The plan is still in flux, but GM and the union could finalize terms as early as next week. The Detroit auto maker expects to halve its remaining cash outlays for retiree health costs to about $10 billion, and supplement that contribution with a 39% equity stake in the reorganized GM, the people familiar with the matter said." (The Wall Street Journal)
[Guidance Overview] One-Time Irrevocable Election to Waive Retiree Health Benefits in Exchange for Higher Pay Isn't Taxable
Excerpt: "EBIA Comment: In recent years, concerns about cost and open-ended liability have caused a strong general trend away from retiree medical coverage that is fully paid for by the employer. Instead, many employers are considering ways to help their retirees pay for post-retirement medical expenses on a pre-tax basis, such as through this plan design. But employers must be mindful that any benefits design that offers a choice between cash and nontaxable benefits might result in constructive receipt." (Employee Benefits Institute of America)
[Guidance Overview] Retiree Health Care Waiver not Taxable Income
Excerpt: "The Internal Revenue Service (IRS) has ruled that an arrangement under which employees could give up the right to get retiree health benefits in exchange for a higher future pay rate does not represent a taxable event. That holding came in a private letter ruling, which only directly affects the individual taxpayer requesting the IRS opinion . . . . According to the IRS document, the employer's retiree health insurance program gives employees a chance within 15 days of starting work to waive retiree health care in exchange for a future pay increase. Electing the pay hike does not change the pay rate for employee services already performed." (PLANSPONSOR.com; free registration required)
The Tab for Public Employee Retiree Health Care Benefits Is Spiraling Out of Control
Excerpt: "States pay the costs of retiree health care, which range from full coverage for life to more modest benefits, out of their annual budgets. And the tab has been spiraling out of control. In 2008, employer health insurance premiums increased by 5%, or twice the rate of inflation. 'Governments have piled up huge unfunded health care liabilities, the dimensions of which are just now being realized,' writes Lance Weiss in a report released in 2006 by Deloitte titled 'Paying for Tomorrow.' 'Estimates of unfunded liabilities associated with retiree health benefit plans represent a fiscal crisis for many states and municipalities.'" (Cable News Network)
Ninth Circuit Addresses Retiree Claims Under Bankrupt Employer's Self-Funded Medical Plan
Excerpt: "With bankruptcy filings soaring during this economic downturn, it is always of great interest to benefits practitioners to learn how bankruptcy courts are dealing with the unmet employee benefit obligations that get thrown in the mix. The Ninth Circuit in the case of Consolidated Freightways Corp. v. Aetna, Inc. dealt a blow to retirees (and the insurer who had advanced amounts in payment of retiree claims) by ruling that the retirees' claims for benefits under a self-funded retiree medical portion of the employer's health plan were not entitled to 'priority' in determining the number of employees under Section 507(a)(5) of the Bankruptcy Code, even though active employees' claims were so entitled." (Attorney B. Janell Grenier via Benefitsblog.com)
DOL Tentatively Denies Coca-Cola Retiree Health Care Benefit Funding Proposal
Excerpt: "The Coca-Cola Co. will continue to seek regulatory approval of its innovative retiree health care benefits funding proposal after a tentative Labor Department ruling denying approval of the transaction. In January, Coca-Cola filed with the Labor Department an application detailing what potentially could be a groundbreaking approach to fund retiree health care benefits. Under its plan, the company would use assets now held in a voluntary employees' beneficiary association to purchase medical stop-loss policies from Prudential Insurance Co. of America, which would pay claims over the expected lifetimes of about 4,000 retirees and dependents." (Business Insurance)
U.S. Postmaster Presses Congress to Act on Retiree Health Benefits Bill
Excerpt: "In a letter to a key House subcommittee chairman, US Postmaster General John Potter again pressed his case for Congressional action on proposed legislation that would reduce the agency's out-of-pocket costs for retiree health benefits, which could save the US Postal Service $2 billion this year. The proposed measure, HR 22, would allow the USPS to pay its share of contributions for retiree health benefits, estimated to be $2 billion this year, out of the Postal Service Retiree Health Benefits Fund. Annual payments to prefund health benefit costs for future retirees would still be made by the USPS." (DMNews)
[Opinion] Taking No Action, Public Employee Plan Policymakers and Senior Administrators Are Digging Deeper Hole in OPEB Deficits
Excerpt: "[P]ension costs are surging as investment losses compel pension funds to send higher bills to public employers. That leaves virtually no money available for most jurisdictions to fully fund their OPEB plans on an actuarial basis. So what are most governments doing? Unfortunately, for many the answer is 'nothing.' Paralysis has set in, as the absence of sufficient funding leaves many budget offices declining to set up a properly funded OPEB trust. Many public officials have simply put their heads in the sand and decided to wait out the recession before looking seriously at their OPEB problems." (Governing.com)
[Guidance Overview] Requiring Older, Medicare-Eligible Retirees to Pay Larger Portion of Premium Contribution Under Health Plan Did Not Violate ADEA
Excerpt: "EBIA Comment: There have been few decisions to date applying the 2007 final EEOC regulations regarding Medicare coordination. Although not completely clear, it appears that this court found the Medicare coordination regulations and the equal benefits/equal cost rule to be sufficient, independent grounds for dismissing the retirees' claims. While that may explain the court's limited analysis of the equal benefits/equal cost rule, it would have been helpful if the court had revealed more about why it thought benefits for older and younger retirees were considered equal, given the premium differences." (Employee Benefits Institute of America)
[Guidance Overview] July 1, 2009 Implementation for New Medicare Secondary Payer Reporting
Excerpt: "Group health plans that are not voluntarily sharing data with the Centers for Medicare & Medicaid Services (CMS) will need to confirm that they are able to comply with the new reporting requirements scheduled to go into effect beginning July 1. The responsible reporting entity is typically the plan's insurer or third party administrator ? however, where the plan is self-insured and self administered, the plan administrator or fiduciary is required to report. Specific data is required to enable CMS to verify that benefits are accurately being paid where the Medicare is a secondary payer." (Deloitte via BenefitsLink.com)
[Guidance Overview] Legal Issues When a California Public Agency Attempts an Employee Benefits Reduction
Excerpt: "Although seldom discussed, it is well settled in California that the terms and conditions of public employment applicable to retirement and certain other benefit rights cannot be destroyed without impairing a contractual obligation of the employer. This principle rests upon the 'contract clause' of the United States Constitution, which prohibits any state from passing a law 'impairing the obligation of contracts.' Under the contract clause, the seminal case law in this area provides that a 'state can no more impair, by legislation, the obligation of its own contracts, than it can impair the obligation of the contracts of individuals.'" (Chang Ruthenberg & Long PC)
TIAA-CREF Rolling Out New Retirement Investment Account for Healthcare Expenses
Excerpt: "By setting up what's called a VEBA (voluntary employees beneficiary association), TIAA wants to help people use the same tools employed in tax-advantaged retirement accounts to fund their future medical expenses. Current surveys put lifetime retiree health expenses -- excluding what's covered by Medicare and other programs -- at upwards of $250,000, and climbing." (U.S. News & World Report)
Chrysler Union Taking Big Risk, Its Chief Says
Excerpt: "The president of the United Automobile Workers union, Ron Gettelfinger, said Monday evening that concessions granted to Chrysler would leave the U.A.W.'s new retiree health care fund 'on life support initially.'. . . Mr. Gettelfinger, in his first public comments since Chrysler filed for bankruptcy protection last week, said the equity that Chrysler was substituting for $5.1 billion in cash was worth 'zero today,' and added that the U.A.W. planned on selling its stock as soon as doing so was financially feasible." (The New York Times; free registration required)
Chrysler Deal Could Jeopardize Retiree Health Benefits if Restructured Company Does Not Return to Profitability
Excerpt: "According to the AP/Seattle Post-Intelligencer, 'the union could still come out the winner at Chrysler' and GM, but 'that depends on the iffy prospect of the companies making money again and their stock values rising sharply' (Krisher/Carpenter, AP/Seattle Post-Intelligencer, 5/2). The Times reports that Chrysler's failure would put the voluntary employees' beneficiary association in 'dire straits,' as it would owe the Treasury Department but would not have the funds to pay off its loans, according to the Times (New York Times, 5/2)." (Kaiser Family Foundation)
[Guidance Overview] Abbott Labs Accused of Benefits Interference in Class Action Suit
Excerpt: "Plaintiffs in a class action lawsuit allege Abbott Laboratories cheated workers out of their retirement benefits when the company spun off its hospital products business. The Chicago Sun-Times reports that the lawsuit stems from Abbott Laboratories' 2004 spinoff of its hospital products unit into a separate company, Hospira, which is also named in the suit. Workers claim they were assured by Abbott they would have a comparable benefits package at Hospira, but they did not. After the spinoff, Hospira dropped retiree health insurance benefits, and workers' Abbott pension benefits were frozen. Alleged wrongdoing by Abbott and Hospira cost former Abbott workers 'well in excess of $200 million,' contends plaintiffs' attorney Steve Sprenger, according to the Sun-Times." (PLANSPONSOR.com; free registration required)
If Automakers Go Bankrupt, They Still Must Keep Paying Retirees' Health-Care Benefits for the Short Term
Excerpt: "The companies could ask the court for permission to drop payments, but automakers would have to try to negotiate changes with the United Auto Workers first, said Jeff Ferriell, a professor at Capital University Law School in Columbus. . . . In 2007, GM and Chrysler agreed to move retiree health-care costs from the companies to the union. The companies were supposed to create massive trusts to handle the costs, but they never funded them. So if GM or Chrysler were to file for Chapter 11, the health- care funds would be the companies' largest creditors." (Plain Dealer)
TIAA-CREF Addresses Issue of Retiree Health Care Costs
Excerpt: "TIAA-CREF has developed an offering which seeks to provide employees of nonprofit institutions a way to save during their working years for health care expenses in retirement. The Retiree Health Care Savings Plan allows employers to set up defined-contribution style plans to which employees can contribute part of earnings, post-tax, to be used for health care costs in retirement. Employers have the option of contributing to the plan as well. Employer contributions and earnings are not taxable when used for medical expenses in retirement." (PLANSPONSOR.com; free registration required)
UAW Leaders Recommend Approval of Chrysler Deal
Excerpt: "The United Auto Workers union will own 55 percent of a restructured Chrysler LLC and its retiree health care trust will get a seat on the board if union members vote to approve contract concessions this week. Chrysler stock could even be traded publicly again, as there are mechanisms for the UAW to sell shares to fund the health care trust." (AP via The New York Times; free registration required)
Chrysler, UAW Strike Deal That Includes Using Stock for Half of Automaker's Obligation to VEBA
Excerpt: "Chrysler on Sunday announced that it has reached an agreement with United Auto Workers that will allow the automaker to pay about half of its obligation to a retiree health insurance fund in the form of company stock, the Washington Post reports. Neither Chrysler nor UAW released details of the agreement, which is subject to ratification by the union's members (Whoriskey, Washington Post, 4/27)." (Kaiser Family Foundation)
[Opinion] Reform, Repair ? Don't Destroy ? Public Retirement Systems
Excerpt: "I want to identify a series of constructive reforms for public sector retirement systems -- both the high-profile defined benefit pension plans and cradle-to-grave OPEB plans -- hoping to achieve a sustainable balance in the long run." (Governing.com)
Tax Credit Is Possible To Aid Auto Retirees
Excerpt: "Labor leaders and U.S. officials seeking a way to pay for Chrysler LLC's and General Motors Corp.'s benefit programs for retirees might find an important source of aid in an obscure federal subsidy covering certain retiree health-care costs. Under the provision, known as the health-coverage tax credit, the federal government can pay health-insurance premium costs for early retirees -- those between 55 and 65 years old -- if their former employer runs into financial problems and can't pay promised benefits. In recent years, some early retirees from the troubled U.S. steel industry have used the tax credit, which was created by Congress in 2002. Now some retirees from auto-parts makers also want to take advantage of it." (The Wall Street Journal)
With Restructuring Deadline Looming, UAW Seeks To Protect VEBA in Event of Chrysler Bankruptcy Filing
Excerpt: "The Treasury Department and United Auto Workers have 'an agreement in principle' that would protect the health care benefits and pension plans of Chrysler Group retirees if the company files for bankruptcy, according to people with knowledge of the negotiations, the New York Times reports. Chrysler must present the Obama administration with a plan by April 30 for becoming and remaining financially viable, in order to avoid bankruptcy and receive the remainder of a federal loan granted in December 2008 (Maynard/de la Merced, New York Times, 4/24)." (Kaiser Family Foundation)
Retiree Medical Litigation's Dirty Little Secret: 'Location, Location, Location!' (PDF)
24 pages. Excerpt: "As we will show . . ., the outcome of a retiree medical lawsuit depends on the approach the court takes. The favorite venue for retired union members is the Sixth Circuit, where they are batting 1,000 in retiree medical disputes. Of the 12 published retiree medical cases arising under the Labor Management Relations Act (LMRA) in the Sixth Circuit, all 12 resulted in a finding that retiree medical benefits were vested. Next door, employers crowd the docket because the Seventh Circuit has ruled that retiree medical benefits are not vested in eight out of ten published LMRA cases." (Aspen Publishers via Jones Day)
8 Tips on Paying for Health Care in Retirement
Excerpt: "1. Don't count on employer benefits. Most current employees . . . won't be eligible for retiree health insurance through their former employer . . . . Less than a third of firms with 200 or more workers offered retiree health benefits in 2008, down from the 66 percent that did so in 1988, according to a Kaiser Family Foundation survey." (U.S. News & World Report via Chicago Tribune)
[Guidance Overview] Is It Becoming Easier to Find That Retiree Health Benefits Have Vested?
Excerpt: "It is a well-established principal of ERISA that health benefits, as opposed to pension benefits, are not required to vest. In the absence of vesting, an employer is normally free, under ERISA, to adopt, modify or terminate health benefits, for any reason and at any time. Thus, an employer could, at any time, require employees or retirees to pay a larger share of the cost of health care coverage. However, health benefits will vest if the employer, or in the case of a union, the parties choose to do so." (ERISA Lawyer Blog)
Delphi Retiree Benefits Could Vanish in GM Bankruptcy
Excerpt: "The auto parts maker could face liquidation, with its benefit plans for all retirees being terminated and, most likely, taken over by the government." (Workforce Management; free registration required)
[Guidance Overview] Collective Bargaining Agreements Can Prevent Employers from Reducing or Terminating Retiree Medical Benefits
Excerpt: "While we recognize that the negotiation of collective bargaining agreements is an art in and of itself, this decision should remind employers that the text of such an agreement can bind them to employee benefit obligations they may never have intended, for many years into the future. In the Sixth Circuit, at least, precise text appears to be required to specify that retiree medical benefits are not vested, to sever retiree medical benefit eligibility from pension benefit eligibility, to preserve the right to reduce or eliminate employer contributions, and to preserve the right to amend or terminate the retiree medical plan." (Porter Wright Morris & Arthur LLP)
[Guidance Overview] Summary of Recent Federal Employment Discrimination Law Cases Involving Employee Benefit Plans
21 pages, by attorney Andrew Stumpff. Prepared April 2009. Includes cases on age, gender, pregnancy and disability discrimination. Excerpt: "This represents a survey of recent court decisions involving the intersection of employment discrimination law and employee benefit law. Cash balance plan litigation is omitted, as are cases involving only ERISA Section 510. Case summaries are limited to only those parts of the decisions that relate to the interplay of employee benefits and employment discrimination law." (Stevenson Keppelman Associates)
San Diego Studies Shift to Defined-Contribution for Retiree Health Care
Excerpt: "At a hearing Tuesday, the San Diego City Council will discuss a proposal to rework the retiree health care benefits system for city workers, moving to a defined-contribution system that could leave retired workers to shoulder more of their own health care costs, Voice of San Diego reports. Currently, the city uses a defined-benefit system that provides up to $8,880 toward each retiree's health care costs. The contribution can increase by as much as 10% annually to help address rising health care costs." (California HealthCare Foundation)
Southern California Towns See Millions in Retiree Healthcare Liabilities
Excerpt: "What governments are finding in many cases is that the cost estimates are far bigger than they expected. Many are only now coming to terms with the fact that if they don't start saving now, or reduce benefit packages, taxpayers will be harder hit in the future." (Whittier Daily News)
Appellate Court Declines to Disturb AK Steel VEBA
Excerpt: "A federal appellate court has refused to invalidate a plan by AK Steel Corp. to establish a $663-million voluntary employees' beneficiary association (VEBA) to fund retiree health benefits. The 6th U.S. Circuit Court of Appeals refused to disturb a lower court's decision approving an out-of-court settlement of a suit filed by retirees in an effort to block the company's intention to curb its retiree health package. In its decision, the 6th Circuit said that the lower court judge was right in turning away an effort by a separate smaller group of retirees for permission to get involved in the case as a separate party so they could try to hold up formation of the VEBA to which they objected." (PLANSPONSOR.com; free registration required)
Anheuser-Busch to Freeze Pension and Ask Retirees to Contribute More for Health Benefits
Excerpt: "Anheuser-Busch plans to freeze its pension plan for salaried employees, eliminate retiree health coverage for new employees and ask retirees to contribute more to their health benefits. The brewer said defined contribution plans, or 401(k)s, are preferred over defined benefit plans, or pension plans, 'because they provide more predictable cash flows and expense for the company,' James Brickey, vice president of people, told salaried employees in an internal memo Wednesday." (St. Louis Business Journal via bizjournals.com; free registration required)
[Opinion] Group Letter Opposing Emergency Retiree Health Benefits Protection Act, H.R. 1322 (PDF)
Excerpt: "The undersigned organizations are writing to express concern over the re-introduction of H.R. 1322, the 'Emergency Retiree Health Benefits Protection Act of 2009.' As we expressed previously, our organizations share your interest in quality medical coverage for seniors but believe that mandating retiree health benefits will lead only to increased costs and fewer benefits. Moreover, the bill overrides one of the most important principles of ERISA and the employer-based system ? the voluntary nature of employee benefits." (American Benefits Council)
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