Saying it’s necessary to successfully come out of Chapter 11 bankruptcy, West Hartford gunmaker Colt has proposed a major restructuring of its retiree health benefits. The UAW says it is confident a resolution can be achieved on the issue.
Colt seeks to convert the retiree health benefit from a self-insured component and a fully-insured component (both with costs it says exceeds the average claims experience), to a health reimbursement account model with a fixed, per participant contribution by Colt. It said that amount would be based on historical average claims experience.
The change would affect several hundred Colt UAW retirees. In court papers, Colt said it could save $180,000 annually based on current retiree levels.
Colt’s court filing says its fully-reimbursed component premium for 2015 was $2,782, which was fully paid by the company. The annual premium is expected to increase each year but will be capped at $3,000. Colt said it spends approximately $543,000 annually on premiums.
It said with respect to the self-insured component, the costs are even more significant. For 2015, the expected cost of paying claims is estimated at approximately $715,000. For 2015 alone, Colt said it will spend approximately $1.4 million on postretirement health benefits, which includes approximately $200,000 in administrative fees.
In its court filing, Colt said as a result of these ongoing and future costs, its best actuarial calculations place its total liabilities for the post-retirement health benefits at $25.75 million, along with annual costs (as noted above) of approximately $1.4 million.
According to the federal bankruptcy court filing, Colt and the UAW are continuing their discussions, and neither side considers the filing of this motion as the end of negotiations but a continuation of the process.
