Ideas for retiree medical plan cost reduction needed

[Guest el_Leon]

we are looking for ideas about how to reduce retiree medical program costs (cash flow, balance sheet accounting). The basis situation is that

- there is a large group of retirees,

- several unions, and

- SPD & plan documents they did not include the ability to terminate the plans.

- currently being reorganized under the protection of the bankruptcy courts (Under their proposed reorganization plan it looks like all creditors will get paid 100%).

We're are willing to consider any ideas no matter how innovative/aggressive.

[GBurns]

I have some ideas that might be of interest and a referral to a unique plan that I came across that was designed to reduce the cost by "carving out" the retiress into a alternative "special" plan.

However, this board is not the proper medium at this point so send me an email if you want further info.

[Guest b2kates]

I had previously been involved in a local steel company bankruptcy. Under the auspices of the bankruptcy they terminated their retiree plan. In addition they established a post retirement veba and funded it for 5 years up front.

I drafted the PLR request that this was collective bargaining for the 419(A) exception. Took the service 18 months to rule but it was granted.

[mbozek]

Several years ago I advised a client on how to set up accounts which would be used toward the purchase of individual health insurance selected by the retirees and the contributions would be excluded from employees taxation as an employer contribution for health care. As I recollect there are some tricky tax issues. Another concept if there is an over funded retirement plan is to increase the retirement benefits so as to provide the funds for the retirees to pay for individual health insurance policies. Both of these cases involved non union employees. Of course under the bankruptcy laws the health benfits can be curtailed under certain conditions with the approval of the court- but you need to talk to bankruptcy counsel about that. If you are interested in discussing the above ideas further contact me by email.