IMPORTANT NOTICE TO ALL STEEL VEBA PARTICIPANTS
Steel Industry Retirees Need to Pay Close Attention to VEBA Enrollment Rules and Consider Their Options
On June 5, 2012, a bankruptcy court in New York approved the creation of a new Voluntary Employee Beneficiary Association (VEBA) for steel industry retirees who are eligible for the health care tax credit (HCTC). This VEBA, which is known as the “Steel Retiree VEBA Trust,” is the creation of three trustees and a San Francisco law firm with no prior connection to the steel industry or its retiree population.
The USW is concerned that the introduction of this new VEBA and the efforts to sell the VEBA to retiree populations could create risks for some of our retirees. For that reason, we are sending this message. To be clear, this new VEBA is not sponsored, affiliated or endorsed by the United Steelworkers (USW) union.
Many of the potentially eligible participants of this new VEBA are either already covered by a USW-negotiated VEBA or are eligible for the health coverage tax credit if they are between the ages of 55 and 64, receive a pension from the Pension Benefit Guarantee Corporation (PBGC) and are not covered by Medicare.
If you are currently covered by a VEBA, closely check your enrollment rules if you are considering a change. Many VEBAs prohibit re-enrollment once you give up your coverage. For example, VEBAs covering Republic Steel and Wheeling-Pittsburgh Steel retirees prohibit retirees who terminate their participation from re-enrolling. If you drop out of a VEBA that prohibits re-enrollment, you may be barred in the future from re-enrolling if you become dissatisfied with the “Steel Retirees” VEBA or if that VEBA ceases to exist.
While initial coverage and premiums may be similar to existing VEBA, you should investigate the longevity of any new plan. The new VEBA approved will be funded solely by HCTC reimbursements and retiree premiums, and does not guarantee continuing coverage after the first year.
Unlike many USW-negotiated VEBAs, there will be no company contributions and with HCTC scheduled to expire in 2013, there is no certainty in projecting premium costs in upcoming years. In addition, the administrative costs of the new VEBA appear to be higher than many existing VEBAs negotiated by the USW.
Quite simply, it could be risky for any retiree currently covered by a USW-negotiated VEBA to change coverage. Some 250,000 retirees are currently covered by USW-negotiated VEBAs that were established with the sole purpose of providing the highest quality of coverage at the most economical price.