Florida's GM retirees fear benefit cuts

Michael Higgins will never regret the day he turned down his chance to become a manager at General Motors.

It means that he still has company health care coverage. But at 68, he doesn't know how long it will last.

As of Jan. 1, the automaker canceled all health care coverage for its retired managers. Higgins and other retired hourly workers, covered by union contracts, still have their benefits, but that could change any day as GM calls for more cuts in its struggle to survive.

"Everybody is scared," Higgins said, at home in Palm Harbor, recuperating from a seizure that left him comatose for two weeks.

"I talk to my buddies up in Flint and they don't know what's going to happen. Nobody knows. But they know it's not going to be good," Higgins said.

Thousands of GM workers are living out their retirement years in Florida. The numbers include more than 10,000 non-union retirees and their spouses, said Jack Dickinson, who runs a Web site for all retired salaried workers, www.overthehillcarpeople.com. Both union and non-union retirees gather regularly in more than half a dozen clubs stretching from Martin to Citrus counties.

They've long enjoyed some of the best benefits in the country. But now they're struggling to adjust to drastic changes and waiting for the next blow.

In addition to the health care cuts, the value of their GM stock has fallen to less than $2 a share, from $30 just a year ago. And as the threat of bankruptcy for GM looms, they worry if their pensions are safe.

For years, the U.S. auto companies have lost business to Toyota and other foreign companies. But as recession fears took hold last year and consumers zipped up their pocketbooks, the U.S. automakers' revenue plummeted. Now GM executives say the company will go bankrupt without government help.

GM and Chrysler presented the government with restructuring plans at the end of March, but President Barack Obama's auto task force rejected them.

GM had already received $13.4 billion in government loans. But if it wanted more, it would have to make more cuts, the task force said. It singled out GM's retiree benefits, saying that under current proposals, they would grow to the "unsustainable" level of $6 billion by 2013.

Both companies could be forced into bankruptcy if they don't meet the government's demands. The worst case would be a Chapter 7 liquidation. If that happened, the government's Pension Benefit Guarantee Corp. would take over pension obligations.

The benefit guarantee agency is the arm of the federal government that pays pensions for private corporations that go out of business. It limits payments to $54,000 per year for people 65 and older, but some analysts worry that taking on automaker retirees could swamp the system and force it to impose even lower limits.

"We're still hoping things will turn around, but it seems like there's a lot of people against the auto companies," said Marian Fabi, a retired GM assembler who now lives in Indian Shores. "Why is it they're against us and not against the banks. It's just a shame they're picking on an industry that gives so many people employment."

Art Schweitzer, 79, is proud of the 30 years he spent with "Generous Motors," as he calls it. A director of GM divisions in several countries, including Mexico and Brazil, he and his wife both drive Cadillacs. Even his pajamas bear a GM logo, he said.

He and his wife are comfortable. They live in a gated, golf course community. But replacing GM's health care benefits is costing them $6,000 a year. His pension could be slashed. And his loyalty kept him from dumping his GM stock before it nosedived.

"Whatever happens we'll survive," he said. But he feels abandoned by the company to which he dedicated his life. "They made us promises," he said. "We had a lot of confidence on those promises. We trusted their word."

People panicked when GM announced last year it was terminating health care coverage for more than 100,000 salaried retirees, said Dickinson, a GM retiree living in Birmingham, Ala.

"We're talking about people living on a fixed income, basically living off what's left of their 401ks and Social Security and their GM pension, which is in jeopardy," he said.

"Imagine being 86 years old, retired for 25 years and you're laying in a nursing home and you don't have insurance anymore. Or you're computer illiterate or you can't think as clearly as you used to. It's a nightmare, an absolute nightmare."

He's used the resources of his Web site to help people sign up for Medicare and compare private supplemental policies.

To make up for the loss, the company is giving the retirees $300 a month, which amounts to about $255 after taxes. But for many, it buys only basic Medicare policies, which don't cover dental, vision, hearing care and many other services included in the GM policies.

Dickinson knows a lot of people think GM retirees had it too good and don't feel sorry for them now. But they need to understand, he said, that he and many others had their chances to leave the company. They stayed because it promised a safe, secure retirement. "Those promises were part of our compensation."

Carolyn and Michael Higgins still have their health care coverage. As an engine plant supervisor, Michael had been offered a management position, but he gave it up before he retired to become an hourly worker again, covered by the United Auto Workers.

"I didn't like all the management rules," Michael said.

Like her husband, Carolyn spent more than 30 years at GM. She was a senior accountant, a salaried position. But she continues to have health coverage through her husband.

As the union contracts have been renegotiated over the years, the cost of that coverage has gone up and benefits have gone down. Carolyn, 67, was recently prescribed two Nexium a day for her reflux, but the policy will only pay for one a day.

And she knows more drastic changes are to come, as GM pushes for more union concessions to cut company costs.

Preparing for the worst, Carolyn has returned to coupon clipping and bargain hunting. To cut their electric bills, the couple keeps their shades drawn throughout the day so they can keep the air conditioner off.

The couple receives Social Security payments. And their $2,000 per month pension would probably be safe even if GM went out of business. That's within the limits of what the government pension guarantee agency now says it would pay.

"But how long that would last we don't know," Carolyn said. "There's just so much uncertainty." But she's sure more drastic changes are to come as GM pushes for more union concessions to cut company costs.

To Fabi, of Indian Shores, "it looks like they just want to break the contracts" that ensure the hourly retiree health benefits.

She worries about her and her husband's futures. They both worked on GM assembly lines for more than 30 years. But if GM and the other auto companies go out of business, so many jobs and benefits will be lost, "it is going to be devastating for the country."