Headlines about "Health plans - retiree coverage"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] Court Finds a Breach of Fiduciary Duty Despite Clear Statement in SPD that Employer Could Amend Retiree Medical Plan
Excerpt: "[The Third Circuit] held that Unisys breached its fiduciary duty by not informing retirees that Unisys retained the right to change the terms of their retiree medical benefits. In reaching this conclusion, the court rejected Unisys' key arguments that (1) there was no need to inform the individuals of Unisys' right to amend because no amendments were being contemplated at the time, (2) the Summary Plan Description (SPD) Unisys distributed expressly stated that Unisys retained the right to amend the plan, and (3) the injunction compelling Unisys to reinstate the plan without the right to change benefits impermissibly restricted Unisys in its capacity as a settlor." (Buchanan Ingersoll & Rooney)
Will Rising Required Benefit Plan Contributions Encourage Collapse of the Municipal Bond Market?
Excerpt: "[In a report entitled 'Dark Vision: The Coming Collapse of the Municipal Bond Market', Frederick J. Sheehan] notes that 'spending is rising and revenue is collapsing' for all levels of government. Pension fund losses will require governments to double their contributions to pension plans . . . ." (Phillip Greenspun)
[Guidance Overview] Deferred Compensation Timing Rules, Rather Than Subchapter L, Govern Insurance Company's Deduction for Retiree Medical Benefits (PDF)
1 page. Excerpt: "In a Technical Advice Memorandum (TAM 200939019 (June 10, 2009)), the Internal Revenue Service concluded that the deduction timing rules of Internal Revenue Code (IRC) ? 404(a)(5) trump Subchapter L in governing a deduction for retiree medical expenses." (Sutherland Asbill & Brennan LLP)
Creating the Impression of Lifetime Retiree Health Benefits Is Breach of ERISA's Fiduciary Duties
Excerpt: "An employer breached ERISA's fiduciary duties by giving employees the impression that retiree health benefits would continue for life when, in fact, the company had the power to eliminate them at any time, ruled the Third Circuit Court of Appeals (In re: Unisys Corp. Retiree Med. Benefits ERISA Litig.). The court said the message to employees during retirement counseling was 'at best a half truth' without mention of the company's right to amend the plan. The latest decision in this protracted litigation reminds employers not to overpromise in retiree health or any benefit communications." (Mercer LLC)
[Guidance Overview] 2010 Cost-of-Living Adjustments for Medicare (PDF)
2 pages. Note the paragraph on page 2 regarding employer action to be taken. (Milliman)
GM Replacing Traditional Health Plan for Some Retirees
Excerpt: "General Motors Corp. will replace its traditional health care plan for salaried retirees younger than 65 with a consumer-driven health plan linked to health savings accounts effective Jan. 1, 2010. Under the new arrangement, posted on a GM retiree Web site, the annual deductible will be $2,500 for individual coverage and $5,000 for family coverage. The maximum annual out-of-pocket expense will be $3,500 for individuals and $7,000 for families." (Business Insurance)
[Guidance Overview] Deere & Co. Wins Suit over Retiree Health Benefits Reduction
Excerpt: "The U.S. District Court for the Southern District of Iowa has ruled that Deere & Co. did not violate the Employee Retirement Income Security Act (ERISA) when it changed its health benefit offering to retirees. Judge Charles R. Wolle said in his opinion that Deere was unambiguous when it reserved its right to amend the retirees' health benefits. Wolle rejected the retirees' argument that their benefits were vested and could not be altered by Deere because summary plan descriptions said their health benefits 'will continue' during retirement. 'Instead, Deere repeatedly and plainly stated in plan documents, including SPDs, that it retained the right to amend, modify or terminate the benefit plans,' the opinion said." (PLANSPONSOR.com; free registration required)
Watson Finds Employer Spending on Retirement Benefits Declining
Excerpt: "Employers' investment in workers' retirement benefits, measured by benefit values as a percentage of pay, has dropped consistently over the last decade, according to research by Watson Wyatt. A Watson Wyatt analysis of 183 employers found that the total value of retirement benefits -- DB, DC and retiree health plans -- provided to employees decreased from 7.8% of pay in 2002 to 6.9% of pay in 2008, according to a press release. For the 79 companies that maintained DB plans throughout this period, the value of the overall benefits declined from 9.4% to 8.6% of pay, mostly due to a significant cut in post-retirement health benefits." (PLANSPONSOR.com; free registration required)
Bridge Employment and Retirees' Health: A Longitudinal Investigation (PDF)
16 pages. Excerpt: "The present study examined the relationship between bridge employment and retirees' health outcomes (i.e., major diseases, functional limitations, and mental health). We used a nationallyrepresentative sample of 12,189 retirees from the first 4 waves of the Health and Retirement Study. Hierarchical regression analyses showed that compared with full retirement, engaging in bridge employment either in a career field or in a different field was associated with fewer majordiseases and functional limitations, whereas engaging in career bridge employment was associated with better mental health. The findings highlight the health benefits of engaging in bridge employment for retirees. The practical implications of this study are discussed at both the individual and policy levels. Limitations of the current findings are also noted in conjunction with future research directions." (American Psychological Association)
Investigation of Fireman's Fund Termination of Retiree Medical Benefits
Excerpt: "At the end of September, Fireman's Fund Insurance Company ('FFIC') notified most of its retirees that it intends to discontinue providing medical benefits for the overwhelming majority of its retirees effective January 1, 2010. Cohen Milstein is currently investigating whether FFIC is permitted to make those changes." (Lewis, Feinberg, Lee, Renaker & Jackson, P.C.)
IRS Representatives Address Employee Benefits Issues at Meeting
Excerpt: "In a meeting on employee benefits issues raised by the American Bar Association's (ABA) employee benefits committee section on taxation, representatives of the Internal Revenue Service addressed COBRA, imputing fair-market value to self-insured employer-provided health care coverage, and one-time lump sum cash payments for irreversible waiver of retiree health benefits. Two of the COBRA situations involved the tax treatment of employer voluntarily continued coverage after COBRA ends for certain beneficiaries, and waiver of the COBRA subsidy." (Wolters Kluwer)
Corpus Christi, Texas, Police Pension Benefits Curtailed
Excerpt: "Trustees for a union-run health insurance trust voted to curtail benefits in July, citing unsustainable obligations. The plan had paid about $400 per month for her benefits, Roberts said. Now the plan will pay just a fraction of that. According to financial statements filed in 2008, the trust had roughly $2 million in assets in 2007. But the trust had incurred nearly $38 million in obligations. Since then, the obligations have risen and the assets have declined." (The E.W. Scripps Co.)
Can VEBAs Alleviate Retiree Health Care Problems?
Excerpt: "Recent negotiations between the United Auto Workers (UAW) and Detroit automakers focused attention on an innovative response to the long-term decline in retiree health insurance in the United States. The union agreed to set up a trust called a Voluntary Employees' Beneficiary Association (VEBA) to assume responsibility for the UAW retiree medical care at the companies. An analysis of the General Motors Corporation VEBA suggests that it is a second-best option to employer-paid retiree coverage. However, absent comprehensive national health-care reform, it may be a viable alternative for those unable to fend off the elimination of retiree health elimination by an employer." (Pension Research Council; registration required to download fulltext of paper)
Court Rules Duluth, Minnesota, Free to Change City Employee Retiree Benefits
Excerpt: "A state court has sided with the City of Duluth in a long-standing dispute over the generous health benefits provided to hundreds of retired city workers. The court ruled the city is free to change the retiree's benefits to match those of current workers. State District Judge Kenneth Sandvik said Duluth can change the terms for retired workers' health care and that the city is not bound by whatever terms were in effect the day a particular worker retired. The ruling will directly affect what the city pays each year to cover retirees and members of their families, and it will make a huge difference in the city's long-running budget troubles." (Minnesota Public Radio)
Aligning Public Employee Benefits' Costs with the Fiscal Reality
Excerpt: "The boom days of the millennium decade's early years are over, but the now unsustainable benefits packages negotiated by California state and local governments and their employees remain ? some representing as much as 40 percent of overall budget costs. Our discussions with local government managers and their advisors suggest a tremendous amount of confusion and misinformation about their ability to align employee benefits costs with their fiscal realities. This article discusses one source of much of the confusion ? interpretations by California courts of the Constitutional prohibition against impairment of contracts ? and why local governments have more latitude than they think." (Chang, Ruthenberg & Long PC)
Say Goodbye to Employer Deduction for Retiree Drug Subsidies?
Excerpt: "Tucked away in the amended version of America's Healthy Future Act of 2009 is a provision that would repeal the business deduction for federal subsidies for certain retiree prescription drug plans. In case you didn't know, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 created a retiree drug subsidy program to encourage employers and unions to continue providing high quality prescription drug coverage to their retirees. Employers who continue to maintain retiree health plans that provide prescription drug coverage can receive a tax-favored subsidy." (Wolters Kluwer)
[Guidance Overview] Third Circuit Holds It Was Fiduciary Breach to Fail to Disclose Reservation of Rights Clause at Retirement Meetings (PDF)
Pages 3-4 of 5 pages. Excerpt: "Although several courts have held that fiduciaries do not have to continuously communicate reservation of rights clauses when discussing retiree health benefits with employees, thiscase illustrates that courts nonetheless may closely scrutinize retirement communications to determine if retirees were making fully informed decisions to retire." (Proskauer Rose LLP)
[Opinion] How Should California Pay for Public Employee Retiree Health Benefits?
Excerpt: "California has a number of options, including reducing or reneging on benefits, raising taxes, cutting spending elsewhere, earmarking surplus money for unfunded health premiums, issuing bonds and doing nothing. We asked several stakeholders how California should deal with its retiree health care obligations." (Center for State and Local Government Excellence)
[Official Guidance] Text of Proposed Individual Prohibited Transaction Exemption for Chrysler Healthcare VEBA (PDF)
Excerpt: "Pursuant to the UAW Retiree Settlement Agreement between New Chrysler and the UAW . . . the UAW Chrysler Retiree Medical Benefits Plan . . . will be established to provide retiree medical benefits to certain Chrysler-UAW represented employees and retirees, and their spouses and dependents. . . . Certain transactions called for or necessitated by the Settlement Agreement between New Chrysler and the New Chrylser VEBA Plan are prohibited by the restrictions of 406 of ERISA. Accordingly, the Applicant requests an administrative exemption from the Department with respect to: (1) The acquisition by the New Chrysler VEBA Plan of the Shares and the Note from New Chrysler; (2) the holding by the New Chrysler VEBA Plan of the Shares and the Note; (3) the management of the Shares and Note by an Independent Fiduciary; and (4) the asset transfers to and from the New Chrysler VEBA Plan necessitated by the transition of benefits payment responsibility from one plan to another, or due to mistaken deposits into the New Chrysler VEBA Plan." (Employee Benefits Security Administration, U.S. Department of Labor)
EBSA Proposes ERISA Exemption for Chrysler VEBA
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) on Friday proposed giving an exemption to allow the New Chrysler Corp. to transfer approximately $4.59 billion in promissory notes and company securities to a Voluntary Employees Benefit Association (VEBA) Plan. The VEBA would provide retiree health benefits for about 120,000 retirees and dependents when it becomes effective on Jan. 1, 2010, EBSA said in a news release." (PLANSPONSOR.com; free registration required)
Public Pension and Retiree Healthcare Expense Problems Mount for Local California Governments
Excerpt: "Unless government officials muster up the political courage to implement reforms that would make government pensions and retiree health-care benefits sustainable, the cost of government services will continue to be inflated and growing pension costs could threaten the very solvency of state and local governments." (PublicCEO.com)
2009 Health and OPEB Funding Study Available Now
Excerpt: "According to a new survey partially funded by NCPERS, approximately 49 percent of the nations' cities, counties and townships expect less revenue in 2010, 21 percent expect fewer employees, and about 26 expect increased consolidation of local services. With shrinking budgets and fewer staff, local officials are taking several approaches to contain long-term costs associated with employee and retiree health care." (National Conference on Public Employee Retirement Systems)
Xerox Retirees File Suit for Benefits
Excerpt: "Angered over the prospect of losing lifetime healthcare benefits, former employees have filed a civil lawsuit against Xerox Corp. seeking to have their [supplemental healthcare] benefits package restored." (Buffalo BusinessFirst)
[Opinion] Public Employer Retirement Benefits and the Incumbent Employee Conundrum
Excerpt: "Regardless of political ideology, most public policymakers agree that, given the current financial squeeze, something needs to change. Typically, those who seek to reform these systems begin with new employees, because they are invisible. Over the coming decades, younger workers are likely to receive lower benefits than current employees. But what about incumbent employees? Shouldn't they share some of the load? Here it gets tricky for public managers. The law is pretty clear in most states: You can't reduce pension benefits of retirees. And in most states, a similar rule applies to the previously earned benefits of incumbent employees: They are entitled to what they have already earned for past service. It's a property right, especially for those who have achieved vesting status. But with respect to their future work and the compensation employees receive for their services in 2010 and later, there are vast interstate and ideological differences of opinion about legal rights as well as basic principles of fairness." (Governing.com)
American Airlines to End Health Plan for Non-Union Retirees
Excerpt: "American Airlines Inc. has notified its non-union retirees that the carrier will no longer pay for health insurance coverage for retirees past age 65. . . . The change means about 3,600 retirees older than 65 will have to begin paying for coverage, American said. In addition, about 450 retirees younger than 65 will have to begin paying 25 percent of the cost of their health insurance, the company said. In its letter to retirees, American cited its rising costs as the reason for ending the 'retiree standard medical plan option.' The company declined to give an estimate of how much it would save." (The Dallas Morning News)
[Guidance Overview] More Case Law Regarding Documentation Required to Revise or Terminate Negotiated Retiree Healthcare Benefits
Excerpt: "These decisions provide a reminder to employers that agreeing to less than precise language about retiree health benefits in a collective bargaining agreement may result in obligations long into the future. In addition, these cases raise interesting questions about the extent to which carefully designed plan documents and summary plan descriptions may establish the right to amend and terminate retiree health benefits, notwithstanding ambiguous collective bargaining agreement provisions." (Porter Wright Morris & Arthur LLP)
[Official Guidance] Text of Proposed Prohibited Transaction Exemption for GM VEBA's Employer Securities (PDF)
12 pages. Excerpt: "According to the Applicants, when the New GM VEBA Plan acquired the New GM Common Stock, the Preferred Stock, the Note and the Warrants, each asset might not have been a 'qualifying employer security' within the meaning of section 407(d)(5) and therefore the acquisition of each would not be permitted under section 406(a). Additionally, the Applicants note that even if the New GM Common Stock, the Preferred Stock, the Note and the Warrants were considered qualifying employer securities, the aggregate fair market value of employer securities held by the New GM VEBA Plan would exceed the 10 percent limitation in section 407(a)(2)." (Employee Benefits Security Administration, U.S. Department of Labor)
U.S. Labor Department Proposes Rule Exemption for GM Asset Transfer to Retiree Health Plan
Excerpt: "The U.S. Labor Department proposed Thursday a regulatory exemption that would allow the old GM to transfer various company securities and assets to a health plan sponsored by the new GM, General Motors Co. Items in the transfer would include common stock, preferred stock and a $2.5 billion promissory note, and would go to a health plan established for the company's retirees, according to Labor's Employee Benefits Security Administration. The retiree health plan will cover approximately 700,000 retirees and dependents when it becomes effective Dec.31. This exemption proposal has been put forth because a large transfer of employer securities to the health plan violates federal pension law - Employee Retirement Income Security Act, or ERISA. However, the pension law gives the Labor Department the ability 'to grant exemptions that protect the interests of plan participants and beneficiaries.'" (Dow Jones via The Wall Street Journal)
[Guidance Overview] Boeing Change to Retiree Health Benefits Gets Court Approval
Excerpt: "The U.S. District Court for the Northern District of Illinois has found that Boeing Co. did not violate the Employee Retirement Income Security Act (ERISA) or the Labor Management Relations Act (LMRA) when it presented changes to retirees' health benefits in a 2006 collective bargaining agreement (CBA). The court rejected the UAW's argument that benefits as set out in previous CBAs were vested and could not be changed. According to the opinion, previous CBAs stated the benefits would be provided 'for the duration of the Agreement.'" (PLANSPONSOR.com; free registration required)
Bill Would Divert Stimulus Funds to Pay for Delphi Retirees' Health Care
Excerpt: " A Senate bill introduced Friday would pay for health care coverage for tens of thousands of Delphi Corp. retirees who have lost their insurance. U.S. Sen. Sherrod Brown, D-Ohio, introduced legislation that would shift up to $3 billion from the $787 billion stimulus bill approved in February to pay for health care coverage for about 65,000 retirees and their dependents. The bill would create a Voluntary Employees' Beneficiary Association, or VEBA, to provide health coverage to hourly workers in the IUE-CWA, United Steelworkers and other unions along with salaried Delphi retirees." (The Detroit News)
[Guidance Overview] Retirees Prevail in Claim for Vested Health Benefits Notwithstanding Reservation of Rights Provision in Summary Plan Description
Excerpt: "The Third Circuit made a number of important conclusions when reaching its decision. First, the court concluded that Unisys' human resource staff members were acting in a fiduciary capacity when they discussed the retiree health benefits with the plaintiffs. Second, and most troubling, the court concluded that human resource staff members' failure to disclose Unisys' right to modify or wholly eliminate the plaintiffs' medical benefits at any point in the future resulted in an inadequate disclosure of information. In other words, even though the human resource staff members' representations were accurate statements about the duration and costs of retiree medical benefits at the time the statements were made, the staff members should have said more. Specifically, they should have mentioned that Unisys reserved the right to change benefits in the future, even though there was no current plan to change the benefits." (Nixon Peabody LLP)
[Guidance Overview] Restoration of ERISA Plan for Retirees Appropriate Equitable Relief Following Misrepresentations
Excerpt: "Controversies over post-retirement benefits often yield some of the most detailed analysis of fidiciary obligations in the welfare benefit plan context. The stakes are significant enough to warrant diligent prosecution of the opposing sides of the dispute. This recent opinion in the protracted Unisys litigation is certainly an example. The prior history of this litigation is extensive, but not necessary to appreciate the key points of the opinion." (Roy Harmon III via Health Plan Law)
Prefunding Other Post Employment Benefits in State and Local Governments: Options and Early Evidence
Excerpt: "This new issue brief takes a hard look at the options state and local governments are pursuing to reduce their unfunded liabilities for retiree health care. The brief cites examples of how governments are addressing their OPEB obligations . . . ." (Center for State and Local Government Excellence)
[Guidance Overview] 6th Circuit: Union Retirees Can Proceed with Health Benefits Claim; Plan Terminated by Former Employer
Excerpt: "The 6th U.S. Circuit Court of Appeals has reopened a case in which retirees of LG Philips Displays are seeking to be reinstated with health benefits that ended after their previous employer filed bankruptcy. For a group of former union employees, the appellate court ruled that a district court erred in concluding that a Collective Bargaining Agreement unambiguously states that Philips only 'agreed to provide retirees 'basic' and 'major' medical insurance for the duration of the 2000 CBA.' For a group of former salaried employees, the court agreed with the retirees that because non-party retirees who retired before July 1, 2001, still receive benefits, the health plans are not terminated. The court found LG Philips had to amend or modify the plans to exclude plaintiff retirees, and it failed to comply with the Employee Retirement Income Security Act (ERISA) procedures to do so; therefore its refusal to provide health benefits to the retirees is a breach of fiduciary duty." (PLANSPONSOR.com; free registration required)
West Virginia Facing Huge Post-Employment Benefit Costs for Public Employees
Excerpt: "If state government started saving up for the health premium costs promised to public workers in retirement - much like parents start saving for kids to go to college - it would need to sock away about $669 million beyond the $123 million it is projected to spend on current retirees this year, state officials say. That is the difference between the pay-as-you-go method the state has been using to cover retiree health costs and what it would need to begin covering the unfunded liability from other post-employment benefits, or OPEB, to amortize the pledge over 30 years. The unfunded liability is a moving target officials have recently estimated at $7 billion." (Charleston Daily Mail)
General Motors Agrees to Pay $50M More for Delphi Retiree Health Care
Excerpt: "General Motors Co. has agreed to pay another $50 million to fund health benefits to nearly 50,000 hourly retirees and dependents at Delphi Corp. who were represented by the IUE-CWA and other smaller unions, union officials said today. GM also agreed to a number of other concessions in the deal announced Tuesday, the IUE-CWA announced. It said the unions have reached a tentative agreement with GM for the automaker 'to provide baseline security for retirees who are facing the loss of health care and pensions.'" (The Detroit News)
2010 Medicare Part D Retiree Drug Subsidy Application Deadline Is Coming Soon
Excerpt: "Sponsors of calendar-year retiree medical plans must submit applications by Oct. 2 to obtain the Medicare Part D retiree drug subsidy (RDS) during 2010. RDS applications with valid initial retiree lists are due 90 days before a plan year begins, although sponsors can request an automatic 30-day extension. Even sponsors that previously received the subsidy must reapply each year. This year, attesting actuaries also must register anew, supplying birth dates and Social Security numbers as well as their American Academy of Actuaries membership numbers." (Mercer LLC)
California Highway Patrol Union to Pre-Fund Retiree Health Benefits with Pay Hikes
Excerpt: "On Thursday, Gov. Arnold Schwarzenegger (R) announced that the California Association of Highway Patrolmen agreed to amend a negotiated contract to redirect scheduled wage increases to prepay officers' retiree health benefits, the Sacramento Bee reports. The union, which represents California Highway Patrol officers, amended its contract with the Department of Personnel Administration and agreed to forgo the 0.5% pay hike scheduled to take effect last month." (California HealthCare Foundation)
Americans Underestimating Health Costs in Retirement
Excerpt: "Americans are expressing concern about paying for medical costs during retirement ? and dramatically underestimating the financial burden they'll be expected to bear, a new survey indicates. According to a press release, the July survey of the First Command Financial Behaviors Index reveals that 72% of Americans are at least somewhat concerned about health care costs in retirement, with those closest to retirement expressing the most concern. Respondents predict that they will need about $33,000 above traditional retirement savings to cover health care costs during retirement - only a fraction of the $166,000 in out-of-pocket expenses estimated for someone retiring today and living to age 100." (PLANSPONSOR.com; free registration required)
New Enrollees and High-Income Retirees Will Soon Face Higher Medicare Premiums
Excerpt: "About 75 percent of people will be protected from the premium increase . . . . The remaining 25 percent of Medicare recipients will face larger than normal premium increases because the costs are spread across a smaller share of beneficiaries." (US News & World Report)
The Precarious Promise of Post-Employment Health Benefits
Excerpt: "This article examines the increasingly troubled state of employer-provided health benefits for retirees. The availability of such benefits is a major determinant of both the timing of retirement and the financial security of those who retire. Despite the signal importance of these benefits to current and prospective retirees, employers have been steadily eroding their value and in many cases, eliminating these benefits outright. Such actions are often catastrophic for the retirees affected, especially if they are not yet eligible for Medicare. This article begins by explaining the economic pressures that have precipitated this unfortunate development, including the increasing cost of health care generally." (Social Science Research Network)
[Guidance Overview] MSP Rules Prohibit Terminating Group Health Plan Coverage Based Solely on ESRD Eligibility, Except as Permitted by COBRA
Excerpt: "EBIA Comment: This case reminds us that the rules regarding Medicare eligibility and entitlement (including those for ESRD) are detailed and complex. It highlights that the rule prohibiting termination of group health plan coverage because of ESRD Medicare eligibility or entitlement does not prohibit termination of COBRA when termination of such coverage is expressly permitted (e.g., upon entitlement to Medicare)." (Employee Benefits Institute of America)
Retirees' Health-Care Benefits at Risk, Study Warns
Excerpt: "A nearly two-decade trend that is stripping away employer-provided health-care benefits for retirees in private business will likely continue and could soon hit an even deeper pool of government retirees, new research by a University of Illinois elder law expert warns." (PhysOrg.com)
West Virginia Governor Seeks Compromise on Public Employee Retiree Health Care
Excerpt: "Gov. Joe Manchin is meeting with education leaders, unions and other groups to craft a bill addressing West Virginia's growing liability for subsidizing the health insurance premiums of public employees in retirement. The goal is to have a bill ready by Dec. 15, Manchin said Monday after the first meeting of a working group studying the future costs of other post-employment benefits, also known as the OPEB debt. But first members of the working group must agree on the facts and figures used to determine the debt, estimated by the Public Employees Insurance Agency at about $7 billion." (Charleston Daily Mail)
The Implications of Declining Retiree Health Insurance
Excerpt: "Using data from the Health and Retirement Study, this paper examines the potential consequences of eliminating RHI for both pre-Medicare and Medicare-eligible retirees. For younger retirees the likely primary response is to work longer, and we find that number of workers age 55 to 64 would increase by 7 percent, as some of those who have their access to RHI eliminated would work rather than retire. Of those who still choose to retire, most lack any employer-sponsored health insurance option and would need to find an alternative source of coverage or go uninsured. For Medicare beneficiaries over 65, we estimate that about three quarters would replace RHI with another form of supplemental coverage. This shift would slightly reduce total spending and utilization for individuals who choose basic Medicare or a Medicare HMO as opposed to a Medigap plan, but health outcomes would probably be unaffected no matter which supplemental option is chosen." (Center for Retirement Research at Boston College)
[Guidance Overview] Judge in Visteon Case to Rule on Cutting Retiree Benefits
Excerpt: "A Delaware bankruptcy judge is weighing whether auto parts supplier Visteon Corp. can terminate retiree health care and life insurance benefits for thousands of current and former workers. After a two-day hearing, Judge Christopher Sontchi told attorneys Friday he would consider the evidence and arguments. He gave no indication when he would rule. 'I feel that the record is sufficiently complex and the law is sufficiently complex to require the court to thoroughly review the record,' said Sontchi, whose ruling could affect some 6,600 retirees and their families, and about 1,000 future retirees." (Associated Press)
Maryland's Public Pension Obligations Loom
Excerpt: "The day of reckoning is approaching when the state must meet its pension obligations -- to teachers, state police officers, judges and thousands of other state workers -- and the funding level for these obligations stood at about 79 percent, just below the minimum recommended level, last year. The funding level is likely to fall even lower as the state closes the books on fiscal 2009, which ended June 30. Already, the State Retirement Agency has announced that it lost 20 percent of its assets under management, about $8.1 billion, last year because of investment losses." (The Daily Record (Baltimore, MD))
[Opinion] Health Care Reform and the States' Benefits Budgets
Excerpt: "As I've written before, the idea that national health care changes could impact retiree medical benefits plans has been an excuse for inaction by local politicians who have failed to properly fund these OPEB (other post-employment benefits) plans. Once Congress finalizes a bill for the president's signature, it will become obvious to all that state and local governments remain entirely responsible for the medical benefits they have promised, and there will not be an 'OPEB fairy' to relieve them of their $1.5 trillion unfunded liability. . . . The point of this column is that national health care will most likely bring incrementally higher costs for employee medical benefits in the years to come -- not savings. For OPEB plans that are highly sensitive to prolonged medical-cost inflation that outruns investment income, it's even worse." (Governing.com)
New Scholarship Addresses Retiree Medical Benefits Issues
Excerpt: "A new article published by Richard L. Kaplan, Nicholas J. Powers and Jordan Zucker in the Yale Journal of Health Policy, Law, and Ethics addresses the issues arising in the reduction and termination of retiree health benefits. Professor Kaplan is the Peer and Sarah Pedersen Professor of Law, University of Illinois. [The article] is available for download at SSRN: http://ssrn.com/abstract=1445583[.]" (Roy Harmon III via Health Plan Law)
Are Age-62/63 Retired Worker Beneficiaries at Risk?
Excerpt: "The findings indicate that persons first accepting Social Security retired worker benefits at ages 62 and 63 experience varying degrees of risk to their well being at these ages, and that these risks condition their well-being in retirement and survival probabilities. The major policy implication is that consideration should be given to providing a health insurance option for persons first accepting retired worker benefits prior to age 65. The major research implication is that retirement researchers should consider utilizing a range of measures ? as opposed to a singular and potentially narrow measure -- of risk when assessing the magnitude of risks existing for those accepting retired worker benefits at early ages." (Center for Retirement Research at Boston College)
The Precarious Promise of Post-Employment Health Benefits
Excerpt: "This article examines the increasingly troubled state of employer-provided health benefits for retirees. The availability of such benefits is a major determinant of both the timing of retirement and the financial security of those who retire. Despite the signal importance of these benefits to current and prospective retirees, employers have been steadily eroding their value and in many cases, eliminating these benefits outright. Such actions are often catastrophic for the retirees affected, especially if they are not yet eligible for Medicare." (TaxProf Blog)
U.S. Postal Service Looks for Legislative Relief from Retiree Payments
Excerpt: "Separate bills are currently before the House and the Senate that would provide temporary relief and are nearing full votes, [Postmaster General] Potter said during a conference call with reporters . . . . 'We are working hard with the administration, the Senate and the House to get legislation passed to give us relief from our retiree health benefit payment,' he said. 'I am fairly confident that legislation action will be taken before the end of the year,' he said. However, if it isn't, Potter said postal delivery service will not be interrupted." (Haymarket Media)
Reform Bill Would Stick $10 Billion Band-Aid on Retiree Health Plans
Excerpt: "The percentage of large employers (200 or more workers) offering retiree health benefits has fallen from 66% in 1988 to 31% in 2008, according to one survey. . . . Lawmakers to the rescue. To attempt to slow the erosion of such employment-based plans, the House Energy and Commerce Committee has included a reinsurance program in Section 164 of its reform bill. The provision establishes a temporary program to provide reimbursement to plans for part of the cost of providing health benefits to retirees and their families. The bill establishes a Retiree Reserve Trust Fund and appropriates $10 billion for the fund. The funds are available until expended." (Wolters Kluwer)
[Guidance Overview] Retiree Medical Insurance Litigation's Dirty Little Secret: 'Location, Location, Location!'
Excerpt: "While the Sixth Circuit's decision in Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571 provides some comfort to employers as to its rejection of the 'inference of vesting,' the uncertainty about Yard-Man's legacy remains. With no lingering 'inference of vesting,' retiree medical disputes should begin again with the language found in each contract. Given the Circuit Courts' different approaches to silence about vesting or ambiguous language about vesting, the outcome of a retiree medical dispute may, in large measure, depend on where it is litigated. To avoid the quicksand of extrinsic evidence, employers must be vigilant about how and where they make retiree medical benefit promises. All statements made about these benefits should be reviewed for clarity and consistency. Populating enrollment forms, summary plan descriptions, plan documents, and collective bargaining agreements with a reservation of the right to amend, modify, or terminate the plan is clearly the best medicine. Plan fiduciaries and plan administrators should be mindful of the importance of the reservation of the right to amend or terminate a plan and perhaps consider using prepared scripts in answering recurring questions about retiree medical benefits. If both administrators and fiduciaries follow these simple guidelines, they may find themselves able to readily change their retiree medical plan benefits rather than wallowing in the hell of 'he said/she said' litigation." (Jones Day)
District Judge Will Decide Future of Deere Retirees' Case
Excerpt: "Attorneys began to lay out their arguments in federal court . . . as part of a class action lawsuit that pits thousands of retirees against their former employer, Deere & Co. During a 4 1/2-hour hearing at the federal courthouse in Davenport, U.S. District Judge Charles Wolle heard arguments from both sides on motions for partial summary judgment on the lawsuit's four counts. His order, which will be issued as a written ruling, will determine which - if any - of the issues will proceed to trial. . . . The lawsuit, filed last fall in U.S. District Court, stems from a new benefits plan that Deere rolled out in 2007. It affected about 5,000 of Deere's flex retirees, who had mostly been salaried employees. The suit was filed on behalf of the Flex Retirees Organization, or FRO, a group that formed after the new benefit plan was introduced. . . . [The plaintiffs] argued that Deere violated ERISA and terms of the plans. [Evidence was offered] that retirees were told for years that they would take 'all their benefits' into retirement and coverage would continue for the remainder of their lives." (The Quad-City Times)
[Opinion] States and Cities Make Excuses for Inaction on Funding Retiree Medical Benefits
Excerpt: "As I travel around the country working with public officials to redesign their retiree medical benefits (OPEB) plans to achieve sustainability, I've heard a variety of excuses for inaction, indecision and procrastination. Even though many public officials would never think of leaving their pension plan unfunded, or skip a sinking-fund payment on their bonds, they are willing to do so for retiree medical benefits. Some of their reasons are understandable and rational; some reflect na?vet? and others are just flimsy." (Governing.com)
Pension Plans Can Eliminate Retiree Death Benefits, Appellate Courts Rule
Excerpt: "Pension plan sponsors considering eliminating ancillary retiree death benefits to save costs or ease compliance with accelerated distribution restrictions can take comfort from two federal appeals court decisions. In cases involving similar facts, the courts upheld pension plan amendments removing lump sum retiree death benefits, finding the benefits were not protected by ERISA's anti-cutback rules or contractually vested." (Mercer LLC)
The Financing and Future of Health Benefits for State and Local Government Retirees
Excerpt: "This report is the first systematic (entire workforce) assessment of the level of OPEB (other post-employment benefits) liabilities of US states and a sample of localities. Key findings of the report include: States have unfunded liabilities for retiree health care of about $558 billion. State plans differ substantially in their generosity, coverage, and outstanding liabilities." (Center for State and Local Government Excellence)
States Unsure of How to Fund OPEB Liabilities
Excerpt: "States have unfunded liabilities for retiree health care of about $558 billion, according to a report from the Center for State and Local Government Excellence. Among the states whose actuarial reports the project examined, North Dakota ($31 million), Wyoming ($72 million), Iowa ($0.2 billion), Oregon ($0.3 billion), Rhode Island ($0.5 billion), and Oklahoma ($0.8 billion) have the lowest reported unfunded liabilities. New Jersey ($68.8 billion), New York ($49.7 billion), California ($47.9 billion), North Carolina ($23.8 billion) Connecticut ($21.7 billion), Louisiana ($19.6 billion), and Texas ($17.7 billion) have the highest." (PLANSPONSOR.com; free registration required)
GM Retirees Who Lost Health Care Benefits in Bankruptcy Fight to Get Them Back
Excerpt: "While retirees represented by the United Auto Workers will have a partially funded health care trust managing their health benefits, more than 50,000 retirees represented by three unions -- the IUE-CWA, the United Steelworkers and the International Union of Operating Engineers -- will have no money from the automaker to fund the more than $3 billion in health care obligations." (Workforce.com)
The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.