February 29, 2012 (PLANSPONSOR.com) - Eastman Kodak Co., reorganizing under bankruptcy protection, asked a court’s permission to end healthcare benefits for about 16,000 retirees who are over age 65 and thus eligible for Medicare.
The move, which would take effect May 1, would save the Rochester, New York-based photography company approximately $20.5 million a year, according to a motion filed in U.S. Bankruptcy Court, the Associated Press reports.
Only retirees who stopped working after October 1991 would be affected. According to the Associated Press, in a letter to those retirees, Kodak said the proposed change "represents a necessary step in Kodak's efforts to become a competitive and sustainable enterprise during and after its Chapter 11 reorganization process."
A court hearing on the motion is scheduled for March 20 in New York City. An organization of 3,000 Kodak retirees, known as EKRA, promised legal action.
"EKRA believes that Kodak's motion to terminate the retiree health plan conflicts with the bankruptcy statute protections limiting the alteration of certain benefit plans during bankruptcy," EKRA President Bob Volpe said in a statement. "EKRA advisors will request that the judge require Kodak to negotiate with EKRA and representatives of the affected retirees to reach a more appropriate arrangement."
In its court filing, Kodak said it "believe(s) that terminating post-1991 Medicare enhancement benefits is a logical and socially responsible step to take in rationalizing (its) retiree medical and survivor benefits program, because these benefits do not provide core medical coverage and are readily and economically replaceable in the open market."
In a statement the day after it filed for bankruptcy protection, the company said the move should not affect employee pensions (see "Kodak Bankruptcy Shouldn’t Affect Pensions"). The company is facing an employee lawsuit regarding the bankruptcy and its retirement plans (see "Kodak Employee Files Lawsuit Regarding Retirement Plans").