Eastman Kodak Co., looking to whittle expenses as it reorganizes under bankruptcy protection, wants to end health care benefits for about 16,000 retirees who are over age 65 and thus eligible for Medicare.
The move, which would take effect May 1, would save the Rochester-based photography company about $20.5 million a year, according to a motion filed in U.S. Bankruptcy Court, where Kodak began Chapter 11 proceedings on Jan. 19.
Only retirees who stopped working after October 1991 would be affected.
In a letter Monday to those retirees, Kodak said the proposed change "represents a necessary step in Kodak's efforts to become a competitive and sustainable enterprise during and after its Chapter 11 reorganization process."
Retirees were told they could enroll in Medicare and obtain supplemental coverage, if necessary, at minimal cost.
"In some cases, the costs associated with these options may be lower than what you are now paying under the Kodak plan," the letter said.
But retiree Robert Shanebrook estimated that he and his wife, who turn 65 this year, will pay an extra $1,200 a year on Medicare, compared to the company plan, the Democrat and Chronicle of Rochester reported.
A court hearing on the motion is scheduled for March 20 in New York City.
An organization of 3,000 Kodak retirees, known as EKRA, promised legal action.
"EKRA believes that Kodak's motion to terminate the retiree health plan conflicts with the bankruptcy statute protections limiting the alteration of certain benefit plans during bankruptcy," EKRA President Bob Volpe said in a statement. "EKRA advisors will request that the judge require Kodak to negotiate with EKRA and representatives of the affected retirees to reach a more appropriate arrangement."
The possibility of losing their health care benefits has been a primary worry among Kodak's 38,000 retirees. A letter Monday to Kodak retirees unaffected by the current proposal _ those not yet 65 or who retired before October 1991 _ did little to reassure them.
"This change .... will not apply to you," the letter said. "However, Kodak continues to review its retiree medical, dental and survivor benefits and may in the future request court authority to modify or terminate additional benefits."
In its court filing, Kodak cited the need to bring its retiree benefits costs in line with its current size. Since 2003, Kodak's global workforce has shrunk from 63,900 to 17,000 and revenues have dropped from $14.4 billion to $6 billion, the filing said.
Kodak "believe(s) that terminating post-1991 Medicare enhancement benefits is a logical and socially responsible step to take in rationalizing (its) retiree medical and survivor benefits program, because these benefits do not provide core medical coverage and are readily and economically replaceable in the open market," the document said.
After Youtube Terminated His Account Twice, Hickok45 Found A New Home
Sloppy Language and Thinking | Human Events
Mike Shedlock - Junk Bond Yields Highest in Four Years, Goldman Discusses Oil in Teens; 150 Energy Companies May go Bankrupt
Judicial Watch: Hillary e-mail requested printout “without any identifiers”
Chris Christie skips flight to S.C., heads home to N.J.
Michelle Malkin - TSA: Total Security Abyss
The Biggest Winner from New Hampshire Was Hillary Clinton | RedState