Judy Carter is frustrated.
She spent 24 years in Kaiser Aluminum Corp.’s Trentwood rolling mill driving forklifts and other machinery with the understanding that when she retired, her pension check would be modest — she receives about $622 a month — but at least she wouldn’t have to worry about paying for health insurance.
All of that has changed. Now Carter and perhaps as many as 4,000 Steelworkers and their spouses in the Spokane region can be counted among those experiencing one of the most worrisome financial predicaments facing Americans: losing their health insurance later in life.
With Kaiser in bankruptcy, the Steelworkers union agreed to deep benefit cuts to help the company reorganize. Gone is the company’s generous health insurance coverage, leaving retirees such as Carter to enroll in alternative coverage such as COBRA.
The agreement left Kaiser retirees older than 65 dependent on Medicare, but created a special trust to help offset the high price of prescription drugs.
For retirees between 55 and 65 years old, the deal bounces them onto a COBRA plan, for which they must pay 100 percent of the premium. To offset the cost, the government allows a tax credit, essentially subsidizing 65 percent of that amount.
The agreement was a far cry from the full-paid health insurance benefit retired Steelworkers had enjoyed, but at least it was something, said Peggy Green, president of the Steelworkers Organization of Active Retirees, or SOAR.
As part of the agreement, Kaiser’s pension plans would be surrendered to the federal government’s Pension Benefit Guaranty Corp., which insures corporate retirement plans.
While the union and Kaiser hammered out the deal last winter, the PBGC has so far declined to take over Kaiser’s six remaining pension plans, which, by some estimates, are several hundred million dollars in arrears.
The PBGC’s financial situation already is dire. The agency reported last month that it had a $9.7 billion deficit so far this year as big American companies fold and force the agency to take over pension plans of thousands of affected workers.
Its refusal to assume Kaiser’s pension debts now threatens to gum up the entire agreement and potentially cost Steelworker retirees hundreds of dollars a month for insurance, union members say. To qualify for the 65 percent tax credit for health insurance, recipients must be collecting a pension check from the PBGC.
“This whole thing is frustrating and frightening,” Carter said. “We could be left with lots of people with no insurance. That can have a real ripple effect in a town like Spokane.”
Although the PBGC declined to comment about the Kaiser plan, Dave Foster, district director for the Steelworker’s union, said recently that the agency told him the workers were getting “too rich of a deal.”
He said officials from the union, Kaiser and the PBGC are scheduled to meet Monday and Tuesday to discuss the deal.
The union has already enlisted support from seven U.S. senators, who drafted a letter urging the PBGC to quickly take over Kaiser’s pension plans.
If the agency declines, the agreement could be scrapped and Kaiser’s delicate bankruptcy reorganization could be thrown into disarray, Foster said.
The company plans to emerge from Chapter 11 bankruptcy protection this year.