US:Ford gets OK for health fees
Ford gets OK for health fees
Decision in drawn-out court case lets carmaker up hourly retirees' costs to ease financial burden.
David Shepardson / The Detroit News
WASHINGTON -- After three judges and numerous delays, Ford Motor Co. has finally won court approval to impose new fees on hourly retirees to reduce its soaring health care costs.
The new costs likely will take effect Aug. 1.
In a 77-page opinion, U.S. District Court Judge Paul Borman approved the deal expected to get Ford an annual pretax savings of $650 million and cash savings of about $200 million annually. It also will reduce Ford's overall retirement obligations by $5 billion.
"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 can opt for plans that don't require any fees for health care coverage.
Ford spokeswoman Marcey Evans said the approval will let the company begin charging the higher fees Aug. 1. She said the company was pleased.
It hasn't been an easy road.
On Feb. 24, U.S. District Judge Arthur J. Tarnow tentatively approved the Ford-UAW union deal. He also certified it as a class-action and ordered thousands of letters mailed to retirees.
On March 22, Tarnow withdrew without explanation.
Then the case was assigned to U.S. District Judge Anna Diggs Taylor, who on May recused herself after disclosing that she was on the board of trustees of the Henry Ford Health System, which owns Health Alliance Plan, a health maintenance organization that covers many Ford retirees.
Ford spent $3.5 billion last year to provide health care to 590,000 people, including employees, retirees and dependents.
Ford is also trimming the benefits of salaried employees and retirees, which are less generous than those of union retirees. In 2007, Ford will limit health care contributions to salaried retirees at 2006 levels. Additionally, Ford is limiting paid life insurance benefits for future salaried retirees.
Under the health care deal, Ford will contribute $108 million to the trust between now and 2012. Each current employee will contribute on average $2,000 annually. The trust will also receive appreciation rights on 8.75 million shares of Ford stock.
Retirees and beneficiaries who receive $8,000 or less in pension benefits -- about 32,000 out of 170,000 UAW retirees -- will not be required to pay any new fees.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....