Retirees of Two Bankrupted Steel Giants Find Alternative Health Insurance

May 30, 2006 (PLANSPONSOR.com) - Retired workers from two steel companies eventually found new health coverage after their companies went bankrupt but many went without coverage for sometime, according to a recent study.
By PS

The Kaiser Family Foundation surveyed 2,961 retirees or spouses from Maryland, Pennsylvania, Indiana and Ohio who lost their health benefits when Cleveland-based LTV Corporation and Bethlehem Steel went bankrupt. About 200,000 retirees and their dependents lost health coverage between 2002 and 2003, according to the study.

According to the survey, 29% of pre-65 respondents said they postponed or went without needed hospital care because of medical costs, and 49% postponed physician care due to costs, according to the study. Twelve percent of respondents aged 65 and over said they postponed or went without needed hospital care, and 25 % postponed or went without needed physician care.

Seventy-four percent of pre-65 respondents had health coverage at the time of the survey, and the same percentage of 65+ respondents had Medicare supplemental insurance or were covered by a Medicare HMO at the time of the survey. Thirty percent received coverage through a new job; 19% of retirees received coverage through a spouse’s current or former employer; 17% purchased a private insurance plan; and 17% purchased COBRA continuation coverage, according to the study.

The government also aided some respondents.

According to the study, 26% of respondents eligible for Health Coverage Tax Credit – the age range is 55 to 64 — said they were using the credit, which is higher than the 7% national rate. The federal tax credit pays for 65% of health plan premiums for trade-impacted workers, according to the Internal Revenue Service’s Web site.

Bethlehem Steel went bankrupt in October 2001 and had assured its pensioners that they would not lose their benefits (SeeBethlehem Steel’s Retirees Face Uncertainty ). In March 2003, the company ended health benefits for about 95,000 retirees and dependents, according to the study.

LTV Corporation filed for bankruptcy in December 2000 and ended its health insurance benefits in March 2002. The company transferred its pension obligations to the Pension Benefit Guaranty Corporation (See PBGC To Pick Up LTC Pensions ).

The PBGC has also taken over the pension plans of steel companies such asABC-NACO, Inc., and itssubsidiary, National Castings, Inc., which filed for bankruptcy in October 2001. The plans were underfunded by almost $12 million (See PBGC Takes More Steel Plans ).

The foundation conducted the survey during 2004 but published the results this month.

– Leslie Ziober

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