A U.S. Bankruptcy Court judge in Manhattan approved yesterday Bethlehem Steel Corp.'s plan to terminate health care and life insurance benefits for 95,000 retirees at the end of the month as the company prepares for new ownership.
The decision will have a deep impact in the Baltimore area, where about 20,000 retirees and dependents will lose benefits on March 31.
Retirees now have to hunt for health care insurance to replace the generous benefits they once thought were guaranteed after decades of work at the Sparrows Point mill in Baltimore County.
Bethlehem, which has been operating under bankruptcy protection since October 2001, had said it could no longer afford the nearly $20 million a month in health care costs. The company expects to sell itself to Cleveland-based International Steel Group Inc. next month in a $1.5 billion deal.
About 1,700 retirees, spouses, widows and other family members flocked yesterday to the United Steelworkers of America union hall in Dundalk to attend an information session on health care options. They packed two large halls. Some wheeled oxygen tanks, some walked with the help of canes and walkers, and some were wheelchair-bound.
"I don't know what I'm going to do yet," Rudolph V. Woods, 71, an Army veteran who worked at Sparrows Point for 40 years and retired in 1996, said as he waited outside the union hall yesterday.
Woods, whose last job at Sparrows Point was in the trucking department, had a third stroke a couple of months ago that left him confined to a wheelchair. His vision is deteriorating.
"It's a shame after the years of working for them and they sell us down the drain and throw us away," he said.
A repeat of the meeting was held at the union hall late yesterday afternoon, with more scheduled this week. The USWA has held more than 10 informational meetings across four states that have large concentrations of Bethlehem retirees, union officials said.
At a press briefing at the union hall yesterday, union officials said they had worked for five years -- as the foreign competition became a serious threat to the U.S. steel industry -- to try to avert the loss of retiree health care benefits.
"It is sad that we have to meet here today because around 19,000 of our retirees ... are going to be losing what they thought were guaranteed [health care benefits]," said John Cirri, president of the Steelworkers Local 9477, which represents workers at Sparrows Point. "Not only are their pensions being cut, but their health care is being stripped."
Billy Thompson, the USWA's district director for Maryland, West Virginia, Virginia and Kentucky, said the union is working with new owner International Steel Group Inc. to set up a retiree benefit trust fund to help defray some of the cost of health care to the retirees.
The trust will be funded by a percentage of ISG's profits and is similar to what ISG has offered retirees of other steel companies it purchased in the past. But funds in the trust will not be available to retirees immediately, Thompson said.
`A legalized swindle'
"We consider this [termination of benefits] ... a legalized swindle," Thompson told reporters yesterday.
The union has been unable to persuade a large insurer to commit to offering favorable group rates to its retirees, according to Thompson.
Retired workers who will be hurt most by the termination are those under 65, who are not yet eligible for Medicare and will have to buy individual health care policies. About one-quarter of Bethlehem's retirees in the Baltimore area fall into this category.
They will have the option of continuing their coverage after March 31 under the Consolidated Omnibus Budget Reconciliation Act (COBRA), thanks to a union-negotiated six-month extension. But they would have to pay the full premium for the same coverage.
For example, retirees who were paying about $160 a month for coverage that included a spouse, could face a bill from three to six times higher if they opt for coverage under COBRA.
To offset the higher costs, retirees between 55 and 64 can apply for a federal tax credit under the Trade Adjustment Act of 2002. By taking this credit, retirees can recoup 65 percent of their out-of-pocket health care premium costs.
Another group of retirees -- those 65 and over who are Medicare-eligible -- will face out-of-pocket costs for supplemental insurance, known as Medigap policies.
They will also face higher prescription drug costs, which were generously subsidized under Bethlehem's health plans and are not covered under Medicare.
"I'm trying to see what my options are," Haywood Matthews, a 76-year-old veteran of Sparrows Point, said while standing amid a crush of retirees who strained to listen to the presentation.
"I'm glad that they're explaining it to people," added Riley Franklin, 71, a former crane operator at the Baltimore County plant.