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Ambiguous? What Do You Mean, Ambiguous?

You’ve done it!  You are officially out of the rat race.  You’ve retired – not to a Napa boutique vineyard or a glorious Tuscan agriturismo, perhaps, but at least you’re free of the stress and worry of work life.  Still, there are some niggling doubts that cloud your days, some stray anxious moments.

Suppose, for example, your retiree health benefits, those benefits you worked so long and hard for, those benefits that were solemnly promised to keep you loyal and committed, aren’t so solid after all?  And suppose they just up and disappear one fine day?  Can this happen?  Seriously?

Uh, yes.  And it happens more often than we realize.  A former employer from the private sector is not required to promise retiree health benefits.  And even if they do offer them, there is no federal law stopping them from reducing or eliminating these benefits in the future.  Unless, that is, they have made a very specific promise not to do so.

Yesterday, we went over your Summary Plan Description (SPD), a summary of the terms of your health plan.  Reviewing and understanding this paperwork, and any updates or changes that apply, is the only way you can clearly understand your situation as regards your health benefits.

You are looking for clear and specific language outlining the terms of your coverage.  You will also need to save and review any correspondence your receive from a former employer regarding your health insurance.  Get your hands on all the information available that sheds any light on your former employer’s intentions relating to retiree health benefits.  Some things to look for include:

  • Any correspondence – brochures, letters, medical plan booklets, employee handbooks and any other pertinent written material – containing promises concerning the duration of retiree health benefits.
  • Any records of meetings where your former employer made such promises.
  • Informal correspondence or communications you may have had from your employer about the benefits.  Some courts have taken such communications into account concerning retiree benefits, particularly when plan documents and SPD are vague or ambiguous.
If you plan to retire early, be sure to carefully review any correspondence or agreements from your employer regarding your early retirement.  If you have made special agreements with your employer, be extra careful as you read any materials you receive concerning the terms of that early retirement.  Be looking for things such as these:
  • Is information about the duration of your retiree health benefits covered, in clear, correct and specific terms, in the documents you received?  Are you getting what you thought you were getting?  Are you sure?
  • Are there any records of the meetings you had with your employer concerning an early retirement offer?
  • If you are considering early retirement, you might protect yourself by negotiating a written contract with your employer that includes, in specific terms, details about the health care benefits and the circumstances, if any, under which they can be changed.  It would be prudent to seek experienced legal advice in negotiating this kind of agreement.
  • Know that courts have allowed employers to terminate or amend plans with respect to early retirement offers because the formal plan document, collective bargaining agreement or SPD contained language that permitted such changes.
Here is a note from the Department of Labor regarding the Affordable Care Act and early retiree health plans:
The Affordable Care Act established a Federal Early Retiree Reinsurance Program to help employers maintain health coverage for retirees age 55 and older who are not yet eligible for Medicare.  Employers that are accepted into the Program will receive reimbursement for medical claims for early retirees, their spouses, surviving spouses and dependents.  The Program ends on January 1, 2014 when early retirees will be able to choose from the additional coverage options that will be available in the health insurance exchanges.  Check with your plan administrator or human resources office to see if your employer is participating in the Program.  For more information, visit healthcare.gov.
Of course, should you have any questions, doubts, worries or second guesses, consult an experienced attorney or your union representative, a professional familiar with employee benefits.  Then, pack your things, visit the children, take that cruise, plant that garden!
Another good sites: USDOL
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