Ford wins court approval to charge retirees for health care coverage

[mw3538]

WASHINGTON -- Ford Motor Co. won court approval late Thursday to implement a plan to charge its hourly retirees health care coverage, which clears the way for the Dearborn automaker to begin charging its retirees more on Aug. 1.

In a 77-page-opinion, U.S. District Court Judge Paul Borman approved the deal expected to translate into an annual pretax savings to Ford of $650 million, for cash savings of about $200 million annually. It also will reduce Ford's overall retirement obligations by $5 billion.

Borman called the new fees were "modest."

"The potential loss of all benefits, due to either Ford's financial difficulties or Ford's prevailing on the merits, would be far worse for all class members than the relatively modest charges they will be required to pay," Borman wrote.

Under the health care deal between Ford and the United Auto Workers union, hourly retirees will pay no more than $370 a year for individuals and $752 per family. That figure could not rise more than 3 percent a year. Currently, Ford's hourly retirees do not pay any fees for health care coverage.

The agreement was ratified by the UAW in December, with 51 percent of active Ford members voting for it. Court approval is required because the UAW cannot negotiate on behalf of retirees.

Earlier Ford had hoped to get final court approval in time to execute the cuts by July 1.

Ford spent $3.5 billion last year to provide health care to 590,000 people, including employees, retirees and dependents. The automaker's health care costs have soared 67 percent since 2000 and the company spends $1,100 per vehicle on health care but less than the $1,500 per car General Motors spends on health care.


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[igor]

nice .... they finally got the green light .... I believe this is equivalent to what GM passed in February, right?

Igor

[FordMan]

Wow, a Judge who understands whats going on with Ford.

[56 Starchief]

good.

[Ty_99]

Wow this is a bit of good news in being able to keep the legacy cost down.

[boston boy]

I thinks that is fair

[mjd1001]

On one hand, once you retire, you don't expect for the 'rules' of your retirement package to change.

On the other hand, the ammount they are going to have to pay each month is probably a very small, tiny fraction of the money the retireees are recieving in pension (and in many cases, pension plus Social Security).

There are all too many other people who are of working age in this country who are paying PER MONTH what these people are paying per year for coverage, while at the same time without a job so they can't even afford it.

Is this 'fair' to Ford retirees? I dont' think it is to change something after retirement. But the ammount certainly is fair, all things considered.

[Dutch]

Exactly. Their payments being capped at $752 per family per year is hardly grounds for complaint. In the world of small business and individuals buying their own health insurance, $752 is the per month cost. In fact, that's how much I pay every month.