Retiree Health - Transportation Logistics - 2000
A transportation logistics company with 40 employees and 2 retirees wanted to change the plan design by replace deductibles with cost containment features and replacing an awkward manual administration system to an on-line billing administration system.
The benefit goals could easily be met for the employees but not for retirees. The retiree coverage could not be changed because it was provided without any provision to modify or terminate the coverage. Attempts to negotiate a plan design change with retirees have failed.
Even though the employer was not satisfied with the administration systems or service from the incumbent supplier, no change could be made while retires were alive.
Clearly communicating the employer’s right to modify or terminate benefits is critical. It is important to fully understanding the liability of providing benefits to retired employees.