Retirees scrambling to find health insurance

THE BALTIMORE SUN

Since retiring 20 years ago from Sparrows Point, Robert E. Buchanan has been living with what he thought were financial guarantees. Chief among them: subsidized health care coverage by Bethlehem Steel Corp. that covered himself and his 80-year-old wife for just $164 a month.

But now, at age 81, Buchanan has to wade through a maze of mind-numbing information before he can make critical decisions about health coverage.

"I never thought [health care termination] would happen," said Buchanan, an Army veteran who worked in Sparrows Point's tin mill. "I'm trying to find out what I can do. If it's too much money, I think I'll drop it altogether and go through Veterans Administration. But my wife won't have access. That's what I'm mostly concerned about."

Bethlehem filed a motion this month in U.S. Bankruptcy Court in Manhattan seeking to terminate retiree health care coverage March 31, a move that has meant uncertainty for Buchanan and the roughly 20,000 retirees and their dependents living in the Baltimore area. The court is expected to approve the request tomorrow.

In search of answers, Buchanan took a bus from his West Baltimore home to the Steelworkers union hall in Dundalk last week to join more than 450 fellow retirees at a presentation on health care insurance options.

Buchanan said he's in good health and doesn't require costly prescription drugs - a key benefit for retirees because Medicare does not pay for presecriptions - but he worries about his wife, Phoebe. Though separated, they are still on good terms, and she relies on his health insurance coverage from Bethlehem.

"It's very important for her but I seldom use it at all," said Buchanan, who worked at the mill for 38 years, collecting and recycling scrap steel.

In exchange for years toiling at difficult and often dangerous jobs at the mill, Buchanan and other retirees had expected to collect a steady pension and generous health and life insurance benefits for the rest of their lives.

Since Bethlehem announced its intent to terminate the benefits, local and state officials, along with union leaders, have scrambled to get information to retirees on what to do when their coverage ends.

It was the latest blow to Bethlehem's 95,000 retirees and dependents, who learned in December that their under-funded pension plan would be taken over by the federal government and that monthly pension checks for some would be sharply cut.

Information sessions

Together, the Maryland and Baltimore County departments of aging have held nearly a dozen information sessions for more than 2,200 retirees at centers throughout eastern Baltimore County. And more are scheduled.

"I don't have all the answers, but I can give you some knowledge so that you can make an informed choice," Pat Venable, a health insurance coordinator at the county Department of Aging, told retirees last week as she began a presentation on their health care options.

Local 9477 of the United Steelworkers of America will also hold several information sessions for retirees beginning tomorrow at the Dundalk union hall.

Termination of retiree health care benefits has become increasingly common in the troubled domestic steel industry. More than 200,000 retirees and their dependents have lost their health care benefits as a result of steel company bankruptcies in the past six years, according to the union.

Bethlehem, which has operated in bankruptcy since October 2001, moved to terminate the benefits in advance of an asset sale next month to Cleveland-based International Steel Group Inc. It said it could no longer afford the nearly $20 million in monthly health care bills for its retirees.

Those who expect to be hit hardest include longtime retirees who receive small monthly pensions and can't absorb higher costs as easily.

'Devastated'

"I feel sorry for the guy who's been retired for 15 to 20 years," said Don Kellner, who retired in 1999 and is an officer for a Sparrows Point union retiree association. "They're not making a lot of money in pension. ... Dundalk is going to be devastated."

Another group - workers younger than 65 who took early retirement and are too young for Medicare - also face significant out-of-pocket costs. About 4,400 people, including dependents, in the Baltimore area fall into that category, according to a Bethlehem spokeswoman.

To give retirees more time, the union reached an agreement with Bethlehem to allow retirees to continue group coverage for six months under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Because Bethlehem will not continue as an operating company after the asset sale, it was not legally obligated to offer COBRA coverage.

Under COBRA, retirees pay 100 percent of the premium plus 2 percent in administrative costs. For those younger than 65, the monthly cost ranges from $406 for an individual in a base plan to $921 for family coverage, according to union figures. That is hundreds more than what many retirees were used to paying. Medicare-eligible retirees will pay less.

William Russell Banks, who pays $168 a month for health coverage for himself and his wife, expects the same coverage to cost nearly $900 a month under COBRA.

"We gave up a lot of things for better health care coverage, and now they're reneging on it," said the 63-year-old Banks, who worked in Sparrows Point's maintenance department.

To offset those higher costs, retirees younger than 65 can apply for a tax credit under the Trade Adjustment Act of 2002.

By taking this tax credit, retirees can recoup 65 percent of their out-of-pocket health care premium costs. But they are eligible only if they are between 55 and 64 years old.

Those already in Medicare can opt for a Medigap policy to supplement coverage, according to the Baltimore County Department of Aging. Among 19 companies that the BCDA lists as supplying Medigap insurance in Maryland, the BCDA recommends certain plans that cost from $1,270 to $2,450 in annual premiums.

But retirees younger than 65 also need to be wary of allowing their coverage to lapse too long. After 63 days, they are no longer guaranteed health coverage despite pre-existing health conditions.

Those eligible for Medicare can probably get better rates for supplemental polices than they would pay under COBRA.

But prescription drug costs will be an added financial burden, because the coverage provided by Bethlehem typically provided a significant subsidy.

One retiree at the meeting, Dave Pugh, 62, said he pays $20 for a 30-day prescription of Lipitor, a cholesterol-fighting drug. He expects that cost to skyrocket to $120 a month.

Venable of the county Department of Aging told retirees last week that they can use COBRA as a safety net until they're ready to buy another health policy or seek a job that offers health coverage.

She also encouraged retirees to explore their spouses' health care policies, to see if coverage is available for them.

But that's not an option for Ted and Violet Kulisiewicz, both 61. The couple worked at Sparrows Point until they both retired two years ago. Ted Kulisiewicz, who started at the plant after graduating from Kenwood High School in Essex, operated heavy equipment.

Violet Kulisiewicz was a crane operator before taking early retirement after 23 years.

The couple expect deep cuts in their pension checks and will probably have to buy COBRA coverage costing about $900 a month. Ted Kulisiewicz expects to use savings to buy health insurance until he begins receiving Social Security.

"I was doing good," said Violet Kulisiewicz at the meeting last week. "I thought I would have a halfway-decent retirement, and now I got to worry about it."

Another group of workers - Bethlehem's salaried retirees - can expect COBRA coverage for two months past the termination date. But the group that represents them - the Retired Employees' Benefits Coalition - is negotiating to extend the coverage for six months, the same as for hourly workers.

Many retirees said they found last week's session helpful, but others were reeling from the shock of the impending loss of benefits and the deluge of new information they have to sift through.

"It's hard to absorb," said Al Voglino, 73, who retired in 1990 after working at Sparrows Point for 41 years.

"It's just a little bit too confusing right now," said Claude Nelson, 71, who retired 10 years ago and pays $82 a month for health coverage. "It seems like there's so much at one time."

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