Monday, January 7, 2013

Potential US settlement for Nortel Health Benefits

A number of my colleagues and I have just received a large package of documents from Epiq on a settlement proposal, regarding health and other benefits, between the Retiree Committee and Nortel US. I think all US retirees will receive it. It looks like it is still preliminary but on schedule for court approval in March. The agreement is for Nortel to pay close to $67M to an LLC that the retiree committee will establish, and then the money will be used either by a Voluntary Employee Benefits Association, VEBA, to provide partially subsidized health insurance, or it will be placed into individual Health Reimbursement Accounts, HRAs, to be used to offset medical costs. The two options will be voted on by all claimants before the decision is made. The individual claims for everyone will be sent out and will spell out the present value claim for health insurance, long term care, and life insurance based on actuarial data and each individuals service and age etc. It will then show the portion of the $67M that each individual is entitled to. There was no mention of percentages since everyone's claim is different. They did say that no insurance company was willing to provide long term care or life insurance so the value of those claims will be added to the health claim for health insurance either through the VEBA or HRAs. If the VEBA is voted in then everyone will have to use it or forfeit any claim. If the VEBA vote fails, then the claims will be placed into HRAs. The current benefit program will end May 31st no matter what is voted on. The document also indicated that the Committee of Retired Employees has a web site: