Nortel Asks Federal Court In Bankruptcy Proceedings for Permission to Terminate Insurance Coverage for More Than 4000 Retirees
Posted Jun 23 2010 8:59am
Nortel filed for bankruptcy in January of 2009. The company has arranged for the retirees and dependents the ability to sign up with United Health Care without a physical exam. No word yet on the cost though as that is the next issue, is it affordable.
With many companies filing bankruptcy, this is yet one more group that is facing higher premiums and some perhaps with affordability being out of reach may also join the ranks of the uninsured. Also in the news of late, many big companies are considering paying fines rather than to provide health insurance so how this all plays out remains to be seen with the big picture. BD
As it winds down bankruptcy proceedings, Nortel Networks has asked a federal court to terminate insurance coverage for more than 4,000 retirees and their dependents, many of whom live in the Triangle.
Nortel told the federal judge in Delaware who is overseeing the bankruptcy proceedings that the retiree benefits are costing the company $2 million a month. As of Sept. 1, Nortel wants to cut off retirees' medical coverage, prescription drug coverage, long-term disability and life insurance.
The move will almost certainly increase medical costs for the retirees and their families, who had been promised Nortel-subsidized health care coverage for life. In some cases Nortel was subsidizing nearly half the cost of medical coverage for its former employees.
Joe Samuel, who retired from Nortel in 2008 after 28 years with the company, fears a pre-existing condition will limit his insurance options. He's 61 and had his colon removed after he developed cancer.
Samuel said his health care costs him $560 a month out of pocket for him and his wife, with Nortel covering the other half of the cost.
"While the debtors recognize the importance of the benefits provided under the Retiree Medical Plan to their retired employees, the debtors have determined that it is necessary to terminate the plan at this state of the restructuring," the company told the court.