Colonial meets with retirees to explain termination of medical plan funding

ATLANTA, Ga. – 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.
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, most of whom 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.

Colonial Pipeline announces plans to deny medical insurance to retirees

ALPHARETTA, Ga. - According to an April 16 letter from new Colonial Pipeline Co. President and CEO Tim Felt, the company will cease offering medical, dental, prescription and vision coverage to retirees on Dec. 31, 2009.
Felt said the decision applies to current retirees and to active employees who retire from Colonial in the future.
Medicare provides the bulk of the medical coverage for Colonial retirees and spouses who are eligible.
Colonial currently provides a supplement to retirees who are eligible for Medicare coverage. The supplement is designed to cover part of the cost of supplemental health and prescription drug coverage provided by carriers such as AARP. The supplement amounts to about $3,000 per year for a retired employee and spouse who are eligible for Medicare coverage.
Felt said in the letter that further details on the company’s plan will be provided in June.
During the course of their careers, most Colonial retirees were exposed to harmful toxins including tetraethyl lead, arsenic, selenium and radioactive materials. Employees encounter toxin and carcinogen exposure both during routine job performance at injection sites, pump stations and delivery points, and when required to respond to spills.
The 1990s were particularly dangerous times, with some of the company’s largest spills occurring as Colonial’s basic system, built in the 1960s, deteriorated with age. Colonial pleaded guilty to criminal charges as a result of the 1990s spills.
Colonial is taking the action despite tax credits enacted in the Bush administration in 2002 that benefit employers who provide medical plan coverage to retirees.
The Colonial decision is expected to impact most severely on surviving spouses of deceased retirees.
Colonial's revenues and income after taxes for 2008, as reported in the company's FERC Form 6, had not, as of April 20, been posted on the Federal Energy Regulatory Commission's Web site. However, for 2007, Colonial reported revenues of $796.1 million, and after-tax income distributable to its six oil industry owners of $222.0 million.

Colonial indefinitely delays $3 billion expansion as consumption falls

ATLANTA, Ga. - Colonial Pipeline on Feb. 23 said it has indefinitely postponed plans to expand its refined products system from Baton Rouge, La., to Atlanta.
Demand for gasoline and other petroleum products is down, making it difficult to project future market conditions, the company said in a news release.
Tim Felt, Colonial's new president and CEO, said the Alpharetta-based company was "eager to build this new pipeline, but we believe the prudent and conservative approach is best at this time."
Colonial had planned to start construction on the $3 billion pipeline in 2011.
In Georgia, negotiations with about 500 landowners for easements in Cobb. Paulding, Carroll and Haralson counties would have started in 2010.
Now the timeline is uncertain, Sam Whitehead, a Colonial spokesman, said.
Colonial announced plans to build a third, 460-mile mainline next to its two existing pipelines in 2006. Colonial's pipeline system, which runs underground from Houston to the New York harbor, transports about 70 percent of the petroleum used in Georgia, including gasoline, diesel and jet fuel.
Despite the delay, the company is still seeking the permits from the Georgia Environmental Protection Division. A decision is expected next month, said State Geologist Jim Kennedy.