Gulf USA Corp. retirees got some grim news Wednesday: Their health care benefits will be cut by several hundred dollars a year.
“We’re really going to take it in the shorts,” said pensioner Paul Nelson. “I’ve been retired for 25 years and my pension has been the same. It’s going to be tough to pay more medical bills.”
Pensioners packed the United Steelworkers union hall in Kellogg, where they met with their San Francisco lawyers and an investment banker. The attorneys have represented retirees in Gulf’s complicated bankruptcy since 1993.
More than 2,000 pensioners face reduced medical benefits because Gulf is broke. The company lost nearly $200 million during the last five years through overseas investments. Gulf now is being picked over by creditors, including bondholders, the federal government and retirees.
Gulf once was among the region’s largest employers. It owned the Bunker Hill mine and smelter complex, which employed 2,000 workers and was the Union Pacific Railroad Co.’s largest customer.
Although Bunker Hill shut down in the early 1980s, thousands of former employees remain in the Inland Northwest.
Most pensioners expected Wednesday’s bad news, having followed Gulf’s bankruptcy proceedings for months. Cars crowded the union hall parking lot long before the meeting began. And some retirees left the meeting early, frustrated that it took a couple hours for lawyers to deliver the news.
However, the spectre of health care cuts is no longer just a possibility. With the company’s bankruptcy set to be resolved in June, the cuts now seem more real.
“I don’t know how in the hell I’m going to afford this,” said retiree Louis Cummings. “It’s not good news.”
However dismal, the outlook for Gulf pensioners is brighter than for other creditors. Roughly 1,100 investors who bought Gulf’s bonds in the 1980s, for example, get scarcely four cents on the dollar. And federal taxpayers are stuck with cleaning up Gulf’s share of the Bunker Hill Superfund site in Kellogg - tens of millions of dollars.
The revised medical plan presented to pensioners Wednesday is probably a best-case scenario. Bondholders still are fighting for more money from Gulf.
“The bondholders realize the need for a good medical plan,” said their attorney, Ford Elsaesser of Sandpoint. “But there can be a good medical plan that still gives more money to the bondholders.”
The retirees attorney said the pensioners are getting about as much as possible from Gulf’s bankruptcy.
“Depending on how sick you get, you could be out $1,000 in any given year,” said Stephen Berzon, the retirees’ attorney. “It is substantial for people who are on a fixed income.”
Most pensioners live off Social Security, plus a monthly pension of $100 or so from Gulf.
The magnitude of the medical cuts will not be known for certain until Gulf’s bankruptcy plan is approved in June.
MEMO: This sidebar appeared with the story: BENEFIT CHANGES Health care cuts for Gulf USA Corp. pensioners will vary by individual. But most pensioners will see these changes: Co-payments for prescription drugs. An increase in annual deductibles from $100 to $250 per person, $500 per family. The supplemental insurance, after Medicare, will no longer pay 100 percent of medical expenses.
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