Michigan residents who are considering long-term planning may be interested in a recent report by the Wall Street Journal. The report highlights the fact that the United Auto Workers Union (UAW) is short on funds. This means that the group’s retiree healthcare trust fund is in jeopardy, making the process of long-term planning for auto workers that much more important.
The Voluntary Employees Beneficiary Association (VEBA) provides a trust fund that is responsible for healthcare payments for nearly 820,000 retired auto workers. Not only that, the fund also provides medical benefits to retired workers’ spouses. The union is currently facing a shortfall of about $20 billion. As such, the organization plans to increase deductibles for retirees in the year 2012. These higher out-of-pocket costs will be shouldered by retirees from General Motors, Ford and Chrysler.
One retired worker from the GM Saginaw metal casting plant in Michigan told reporters that he never had faith in the outcome when the UAW took over medical benefits. He said quite frankly, “We don’t know what they are doing with all the money.” The VEBA was constructed in 2007 in conjunction with transformational labor contracts implemented by the UAW. The new contracts slashed the wages of new auto workers but provided relief for companies, as the responsibility of all future medical care would now lie in the hands of the workers. It was also reported that the UAW president attempted to promote the plan by claiming it was more secure than employer-funded benefits, going on to state that the program would remain solvent for the next 80 years; unfortunately, this was not to be the case.
The volatility of the already underfunded healthcare program is cause for concern for many people. In 1998, the average life expectancy nationwide was raised from 68 to 76.7 years, indicating the increased importance of planning for healthcare during the golden years. In this economic crisis, and given the high cost of healthcare, individuals who have not yet investigated long-term care plans may want to look into doing so as soon as possible.
Source: wsws.org, “UAW-run trust fund to cut retiree health benefits,” Jerry White, Nov. 17, 2011