Judge Approves Ford Retiree Health Pact

March 1, 2006 (PLANSPONSOR.com) - Efforts by Ford Motor Co. to slash its retiree health-care expenses got a boost Wednesday when a federal judge gave tentative approval to Ford's health-care concessions deal with the United Auto Workers (UAW).

US District Judge Arthur Tarnow also allowed certain groups of union retirees and their dependents to become parties to an ongoing retiree court fight with Ford, the Associated Press reported. Plaintiffs in the class-action suit now number around 150,000, according to court documents.

Tarnow ruled that Ford had to tell the retirees about the settlement agreement by March 10 and that those who object to the pact have to submit formal complaints to the court by April 28 in order to get access to a May 31 scheduled hearing on the fairness of the settlement, according to the news report. Retirees who object to the agreement must file complaints with the court by April 28 if they wish to participate in a May 31 hearing on the fairness of the settlement.

Under the agreement, retired autoworkers would start paying monthly contributions, annual deductibles and co-payments for some medical services up to a maximum of $370 a year for individuals and $752 for a family. They do not pay such fees now. Meanwhile, hourly workers will not be required to pay deductibles or monthly contributions, but they will have to contribute part of their future wage increases to a trust for future health-care expenses. The agreement also raises the cost of prescription drugs and institutes a $50 emergency room fee for retirees.

Dearborn, Michigan-based Ford, which has been struggling with skyrocketing health-care costs, said the deal will save it $850 million annually and will shave about $5 billion off its long-term retiree health care liability.