Automakers transfer retiree health benefits
■ Responsibility for these benefits now rests with a UAW-appointed trust, and some health plans are gone.
By Emily Berry — Posted Jan. 18, 2010
General Motors, Ford Motor Co. and Chrysler all have moved responsibility and funding for retiree health benefits to a voluntary employee beneficiary association that will be managed by a board of trustees rather than the corporations.
Effective Jan. 1, retiree benefit levels are set by that group, which is charged with overseeing the VEBA, known as the UAW Retiree Medical Benefits Trust. Beneficiaries were to have received new insurance ID cards in December 2009.
The board has notified retirees of changes to coverage as of Jan. 1, including elimination of plans offered by some insurers. The changes vary depending on which company the beneficiary retired from.
So far, the Michigan State Medical Society has not heard any physician complaints about the change, said spokesman David Fox.
As part of collective bargaining agreements reached in 2007, Ford agreed to pay $13.6 billion, GM agreed to contribute $32 billion and Chrysler pledged $8.8 billion to the VEBA.
All three automakers won a special exemption last year during bailout negotiations with the U.S. Treasury Dept. that allowed them to use company shares, along with cash, to fund the VEBA. Ford announced Dec. 31, 2009, that it had transferred assets and prepaid some debt to the VEBA.
GM spokesman Tom Wilkinson and Chrysler spokesman Mike Palese confirmed that their respective companies transferred funds for VEBA obligations effective Jan. 1.
Each companies' funds will be maintained and tracked separately but will be managed collectively by the VEBA's board of trustees.
Moving responsibility for future health care benefit expenses to the VEBA allows the automakers to take those projected costs off their books as they try to emerge from the 2009 financial meltdown that threatened all three companies' survival.
"It helps to improve our competitive position so that we can provide value to our customers and earn healthy profits, and we can provide for our obligations to our employees and retirees," Palese said.