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Changes to Retiree Health Benefits
Employers, who for many years have contracted with their labor unions to provide retiree health benefits, are now finding the burden debilitating. Changes in accounting rules, spiraling health-care costs, increased competition and changing demographics converge to make it economically infeasible for some employers to continue providing such benefits at the generous levels of years past. Consequently, many companies have been compelled to modify their retiree health plans in ways that reduce or eliminate some benefits or that require retirees to pay more out of pocket. These changes have resulted in an avalanche of litigation.
Unfortunately, on some of the questions that are at the core of such litigation, the applicable law is far from uniform. Employers are left with little clear guidance about how to mitigate the legal ' and thus financial ' risks associated with modifying retiree health benefits. This two-part article identifies practical steps that employers can take to prepare for and defend against litigation stemming from changes to retiree health care benefits.
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