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GM-UAW health care settlement approved

A federal judge on Friday approved a settlement requiring union retirees of General Motors Corp. to pay more for their health care.
/ Source: The Associated Press

A federal judge on Friday approved a settlement requiring union retirees of General Motors Corp. to pay more for their health care.

U.S. District Judge Robert Cleland dismissed the objections of a group of retirees who said the settlement worked out by GM and the United Auto Workers violated their contracts.

Hourly workers approved the settlement by a 61-percent margin in November, but GM needed court approval to go forward with the plan since it involves retirees, who didn’t get to vote.

Cleland noted that fewer than 1,250 people out of 476,000 retirees and dependents affected by the settlement objected to it and that the settlement would help keep GM a viable company.

“The delay and risks of litigation have an impact not only on GM, UAW and the Class, but also on the families, businesses and communities that depend on GM’s continued competitiveness and viability,” he wrote. “Those interests are advanced by the Settlement Agreement.”

Under the agreement, hourly retirees would pay deductibles, premiums and co-payments for the first time, up to $752 annually for families and $370 for individuals. Those amounts could rise in the next few years.

The agreement requires active GM hourly workers to contribute part of their future pay increases to a new fund to help pay for retirees’ coverage. GM would contribute $3 billion to that fund through 2011.

U.S. automakers have sought to reduce the burden of growing health care costs at a time when they face intense competition from foreign carmakers. GM lost $10.6 billion in 2005 and spent more than $5 billion on health care for its 1.1 million employees, retirees and their dependents.

GM has said the agreement would save it $1 billion after taxes each year and would shave $15 billion off its $70 billion in long-term retiree health care liabilities.

The UAW also has approved a similar agreement with Ford Motor Co. Judge Arthur Tarnow will consider objections from Ford retirees at a hearing scheduled for May 31.

DaimlerChrysler AG’s Chrysler Group is seeking a similar deal with the UAW.