Honeywell strips health benefits from retirees

April 25--SOUTH BEND -- Martha Stutsman, a longtime union member, retired from Honeywell in 1990 with what she thought were lifetime health and prescription drug benefits.

So it came as a shock Saturday when she opened the mail to find a letter from the aerospace manufacturing company informing her that those benefits would be eliminated on June 30.

"I was sick to my stomach," the 72-year-old Plymouth resident said. "I was totally sick, because this is a death sentence for my husband."

A diabetic and prostate cancer survivor, her husband relies on a number of drugs to stay alive, Stutsman said -- drugs that would cost a combined $14,000 per month if he had to pay for them on his own.

Stutsman is among an unknown number of Honeywell retirees who will lose what they thought were lifetime health benefits later this year, when the company stops offering the benefits to former employees.

In a letter to retirees Saturday, the company, which operates a plant on Bendix Drive, announced in bold type its "intent to terminate" medical and prescription drug coverage for former employees, their spouses and dependents.

The one-page letter advises retirees to "compare the cost and benefits of your Honeywell-sponsored coverage against other offerings available to you in the individual marketplace to identify the alternative health insurance options that best suit your needs from a cost and coverage standpoint."

It notes that the "Medicare supplemental insurance market has matured, providing Medicare-eligible individuals access to affordable and comprehensive health insurance and prescription drug coverage."

The change is not related to recent contract negotiations between Honeywell, formerly Bendix Corp. and then AlliedSignal, and United Auto Workers Local 9, which resulted in a new five-year collective bargaining agreement earlier this year.

But it has provoked anger and fear among local retirees who believed previous contracts guaranteed them health and prescription drug coverage for life.

"They're out of their minds," said Donna Hall, whose late husband retired from Honeywell in 1997 after 35 years with the company. "Is this how Honeywell is going to be a good neighbor to the people who made that company?"

Hall, 70, of Mishawaka, noted Honeywell previously switched to a defined benefit plan for retirees, even though health and drug coverage used to be free. She currently pays $249 per month for coverage for her and her 11-year-old daughter, plus an $18-per-month co-pay for prescription drugs.

"It went from, 'We will have insurance and pay nothing until we die,' to a couple of years ago, 'Now we have to pay for it,' to now telling us we're not going to have it at all," Hall said. "Is the next thing to be taken from us our pension?"

Hall expressed frustration that it took so long for Honeywell to notify employees of the change. She noted that Saturday's letter, in which the company states it is informing retirees of the new policy to provide them "ample opportunity" to explore their insurance options, was dated April 3.

Hall also expressed concern about the cost of coverage on the individual market if Republicans in Congress repeal the Affordable Care Act and replace it with something less affordable for seniors.

Either way, the level of coverage is likely to be less than what retirees currently get through Honeywell, Stutsman said, noting her husband previously paid just $7 for a $430,000 cochlear implant through the company.

Honeywell is not the first U.S. company to slash or eliminate benefits for retirees.

The Kaiser Family Foundation continuously surveys large employers and has documented a steady decline over the past two decades in the number that offer such benefits, from 40 percent in 1999 to 24 percent today.

"This is really all about cost," said Tricia Neuman, director of the foundation's Program on Medicare Policy.

Determining just what benefits local Honeywell retirees are entitled to is difficult. Typical contracts between the union and management last about five years, meaning former employees may have slightly different benefits depending on when they retired.

For most retirees, the benefits from Honeywell supplement what they get from Medicare, which covers some but not all medical procedures and does not provide prescription drug coverage on its own.

Supplemental insurance on the individual market runs hundreds of dollars per month, not including any extra dental, vision or life insurance coverage.

Hall, for her part, expressed concern that some retirees may not even be aware of the change yet.

"A lot of older people are at a point where they don't even read the mail, they just put it on the table," she said. "They're going to go to hospital in July with no insurance and not even realize this."

Honeywell previously attempted to eliminate benefits for retirees of its Greenville, Ohio, plant, arguing that its obligation to provide them ended when the last in a long series of collective bargaining agreements expired in 2014.

Four retirees sued and the court ultimately ruled in their favor. In doing so, it noted that Honeywell continued to pay health care benefits to the retirees after 2014, and that "numerous courts have held" that such action by a for-profit company "suggests that the parties intended the benefits to be vested."

Robert Ferris, a spokesman for Honeywell, on Monday confirmed the retiree benefits changes in a statement that repeated much of the information in the letter. The statement did not address any of the contractual issues brought up by the retirees.

Todd Treder, vice president of UAW Local 9, said the union is exploring options for preserving the health benefits of retirees.

"It's something that our (International Union) lawyers are looking at currently," Treder said, adding, "It's just something that caught us all off-guard."

The international union, for its part, noted that there are "several pending federal court cases that challenge Honeywell Corporation's continued cuts to retiree health benefits."

In the meantime, Stutsman and Hall have started shopping for supplemental health coverage.

"I'm at my wit's end with this," Hall said, "because this is sickening. They're leaving us high and dry."

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