Retiree health and welfare benefits: controversy over their duration.

Abstract

As the cost of providing health-care benefits skyrockets, employers have begun to reduce or even to terminate health-care and life insurance benefits for retirees, often with little awareness of the possible repercussions. Retiree groups and unions have countered these actions with claims based on such theories as the "status benefits" argument--that retirement benefits should be viewed as earned compensation for years of service--or the "vested rights" view--that retirement rights may not be altered without the pensioner's consent. Crucial to these conflicts are the terms of the collective bargaining agreement. Case law indicates that employers can never feel themselves fully protected even if the agreement contains provisions explicitly stating the benefits' scope and duration. The authors demonstrate this point in their review of recent retiree benefits cases. They then explore in detail the problem of contract and document ambiguity, and offer guidelines for ascertaining intent. They conclude with a discussion of strategies for litigating retiree benefits cases.