Colonial Meets With Retirees to Explain Termination of Medical Plan Funding

From: Anvil Publishers, Inc
Published: Thu Jun 25 2009

Colonial Pipeline Co. on June 23 held the first of three meetings with retirees to explain the terms under which it is terminating supplemental medical plan coverage to some 600 retirees and their spouses at the end of 2009, according the a story appearing in the June 24 issue of Energy Pipeline News Daily Update newsletter.

Colonial operates the nation’s largest-volume refined petroleum products pipeline, stretching from Texas the New York harbor.
The afternoon meeting, attended by more than 100 retirees and spouses, was held at the Roswell Country Club in Roswell, Ga.

Since 2003, when Colonial stopped including retirees in its self-insured medical plan for active employees, the company has been providing a nontaxable supplemental payment to help retirees and their spouses pay a part of their annual premiums for AARP medical and drug insurance that supplements Medicare coverage. The AARP supplemental coverage, which costs about $4,900 per year for a retiree and spouse over 65, covers the 20 percent of medical bills not covered by Medicare.

Colonial’s medical and drug plans are self-insured. Until 2003, active employees, retirees and their spouses were all part of the same self-insured pool.

In 2003, when Dave Lemmon was serving as Colonial president and CEO, a human resources manager who was with the company for less than a year administered a split in which Colonial employees 55 and under entered one pool, while active employees 55 and over and retired employees entered another pool.

While a few employees from Colonial’s Human Resources Department were present at the Roswell meeting on June 23, the meeting was facilitated by employees of The Ayco Co., LP, a division of Goldman Sachs.

Colonial President and CEO Tim Felt and other executives were conspicuously absent from the meeting.

Retirees at the meeting asked a number of questions, most relating to the fact that lump sum payments are taxable. Until now, the supplemental payments provided by Colonial have been nontaxable. The fact that up to 40 percent of lump sum payments will be withheld for various taxes has rankled many retirees.

As one retiree at the meeting put it during a break in the program, "I know they’re screwing me, I just haven’t figured out how."

Colonial Human Resources employees present at the meeting said they were unable to figure out a way to make the payments nontaxable.

Colonial is referring questions of a legal nature to the Atlanta law firm of Mazursky Constantine, which was involved in an initial Colonial attempt in 2003 to limit medical benefits to retirees and their spouses.

Colonial Human Resources executives present at the Atlanta meeting did not respond to a question raised about the ethicality of cutting off supplemental medical plan payments to retirees at a time when the company is enjoying record profits. Most of the employees during their active careers were exposed to a wide variety of known and suspect carcinogens, including tetraethyl lead, methyl tertiary butyl ether, tertiary butyl alcohol, benzene, toluene and polycyclic aromatic hydrocarbons.

Two more meetings are scheduled with Colonial retirees and their spouses at Charlotte, N.C., on June 24, and Richmond, Va., on June 26.

The deadline for Colonial retirees and their spouses to return signed release forms to the company’s administrator is July 31. Retirees and spouses who do not return the signed releases have been told they will be cut off from all medical and drug plan benefits if they refuse to sign.

Energy Pipeline News is a daily newsletter about the crude oil, petroleum products and natural gas pipeline business. It is published in Atlanta, Ga. For more information, or

Noel Griese
Anvil Publishers, Inc
Atlanta, GA 30084 USA
Company: Anvil Publishers, Inc
Contact Name: Noel Griese
Contact Email:
Contact Phone: 770-938-0289

Visit website »