Weirton Steel outlines benefits plan
MORGANTOWN -- Bankrupt Weirton Steel Corp. will help provide health care and life insurance benefits to 10,000 retirees, dependents and surviving spouses through a Voluntary Employee Beneficiary Association, but the days of free coverage are over.
The VEBA model was adopted at Wheeling-Pittsburgh Steel Corp. as it emerged from bankruptcy earlier this year and is being instituted throughout the industry.
However, Weirton Steel will become the only bankrupt producer in the United States to offer a company-sponsored life insurance plan, CEO Leonard Wise said Thursday. The current plan will be modified, and retirees will have the chance to buy additional supplemental coverage.
"We are fortunate that our company and union benefits personnel determined ways our retirees and their dependents could participate in new programs," Wise said, calling the changes difficult but unavoidable.
Under the health care plan, Weirton Steel would make an initial contribution to cover startup costs. Ongoing contributions based on profitability would help reduce retirees' premiums.
Company officials declined to say Thursday how much any of those contributions would be. They also would not disclose the amount of retirees' premiums.
Weirton Steel has begun mailing letters to retirees and scheduled a series of meetings at the Serbian-American Cultural Center in Weirton to answer questions.
The nation's fifth-largest integrated steel producer filed for Chapter 11 protection in May and is aiming to emerge by year's end. Last week, it won approval for a federally guaranteed $145 million loan, and it is proceeding with its reorganization plan with hopes of gaining creditors' approval Dec. 16.
The Pension Benefit Guaranty Corp. already has moved to take over Weirton Steel's underfunded pension plan, and the company had been looking for ways to dramatically reduce the cost of other retiree benefits.
A deal was struck with the Independent Steelworkers Union and the Independent Guard Union on Nov. 14.
"Our union leadership has stated all along we wanted to maintain affordable and quality health care for our retirees," said ISU President Mark Glyptis. "We did not want to leave our current retirees out in the cold."
In a failed, last-ditch effort to avoid bankruptcy earlier this year, retirees were asked to help cover the cost of health coverage by agreeing to a $200 monthly deduction from pension checks. That proposal also envisioned higher copayments for prescription drugs and doctor visits.
The new health care plan divides retirees into three groups: