Steel retirees who lost health benefits get help

Md. plan, federal tax credits ease the cost for some


Federal tax credits significantly helped retired steel workers, including Bethlehem Steel's Maryland retirees, get health insurance when their former employers cut off benefits, according to a study released today by the Kaiser Family Foundation.

The study also found that a state program enrolled about a sixth of Maryland's Bethlehem Steel retirees, making them less reliant on taking new jobs or paying for individual coverage than their counterparts in other states.

The Kaiser study surveyed 2,961 retirees or spouses from Bethlehem Steel and LTV Steel, each of which ended retiree benefits as part of bankruptcies.

While the federal and state efforts mitigated the pain of losing benefits, the study found, there was plenty of pain left. A quarter of retirees under 65 said they used up "a lot" of savings to cover health costs. Half said they postponed medical care because of cost worries.

And half of those too young for Medicare said they or a spouse postponed retirement or returned to work to get benefits. Among them were Dianne and Forrest Grove, of Dundalk. They had blueprints drawn up for a home at Ocean Pines on the Eastern Shore.

But when Bethlehem Steel stripped Forrest Grove of his health care benefits, his wife was forced to keep her part-time job as a Baltimore County government office assistant so they would have coverage. Otherwise, Dianne Grove said, they would have had to pay $1,400 a month for COBRA coverage for themselves and their son.

"I thank God that I had a job I could stay at, whether I liked it or not," said Dianne Grove, 57.

Forrest Grove, 62, was an electrician at Bethlehem Steel for more than 37 years before retiring in 2001. He takes five drugs for a variety of ailments including Type II diabetes and back pain. His pension dropped by $900 a month when the federal Pension Benefit Guarantee Corp. took over Bethlehem's pension plan.

"It's an unfair burden on her," he said. "I was the primary breadwinner."

The Kaiser study found 18 percent of the retirees below the Medicare age of 65 were uninsured at the time the survey was conducted in 2004, which was a year after Beth Steel's benefits ended and two years after LTV's. But many more had been uninsured at some point - 62 percent of the LTV retirees and 35 percent of the former Beth Steel workers.

The crucial difference between the termination of benefits at the two companies was that Beth Steel's occurred just after the launch of a federal tax credit to help pay for health insurance.

That difference created "a natural experiment" and showed "the tax credit really does work," said Isadora Gil, a policy analyst at the Kaiser Family Foundation and a co-author of the report. Called the Health Coverage Tax Credit, or HCTC, the credit in effect pays 65 percent of the cost of health insurance for retirees who lose coverage or for workers who lose their jobs in trade-related plant shutdowns.

Stan Dorn, who has published other studies on the tax credit's use, called the study "really groundbreaking research," the first to compare similar groups of workers before and after the credit."It shows the HCTC has had a positive impact on thousands of people," he said.

Dorn, a senior policy analyst at the Economic and Social Policy Institute, a Washington think tank, was not involved in the Kaiser study, but he reviewed its findings.

The tax credit can be used for so-called COBRA coverage - where the retiree pays for the insurance the company used to provide - or for a qualified state program.

Tom Little, 57, of Joppa, retired at age 50 after more than 31 years at Bethlehem's Sparrows Point plant. He drove a school bus and relied on his pension to make up the rest of his income. Two years later, he lost his health care benefits, and his pension was cut by $800 a month. He was forced to get a better-paying job - driving a tractor-trailer - so he could afford COBRA payments for him and his wife of about $1,000 a month, on top of mortgage payments, credit-card bills and other expenses.

"It was pretty much taking everything I was making to make ends meet," Little said.

The tax credit cut his COBRA payments to $340 a month, which has taken some of the pressure off.

COBRA coverage is available only for 18 months, and as Bethlehem was about to cut off retiree insurance in 2003, Maryland didn't have a qualified state program that would allow retirees to get the tax credit.

Del. Peter A. Hammen, a Baltimore Democrat who became alarmed by the plight of a friend's retired Steelworker father, led a successful effort to create such a program through the Maryland Health Insurance Plan (MHIP).

MHIP offered two different plans, according to Richard Popper, MHIP's executive director. One was nearly identical in premiums and benefits to COBRA coverage, but could continue for longer than 18 months. The other was much lower in cost but had a $1,000 deductible.

There was such a rush to sign up that "I'd go to the bathroom, and I'd come back and there would be 30 voice mails," Popper recalled.

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