New Standards for Retiree Medical Benefits in Collective Bargaining Agreements

The issue of vested medical benefits for retirees has become extremely important over time especially with since medical costs are on the constant rise. The medical costs may exceed what employers and unions had planned. Early this year, on January 26, 2015, the U.S. Supreme Court made a new standard that changed the scene for bestowing of collectively bargained retiree medical benefits with its 9-0 decision in M&G Polymers v. Tackett.

After the expiration of the collective bargaining agreement between M&G Polymers with the union, M& G Polymers decided to require retirees to contribute to the cost of their health coverage. Many retirees sued claiming they have the right to vested medical benefits.

This new decision overturned the Sixth Circuit’s Yard-Man which stated that benefits should vest for life. The decision dispensed a crushing blow to an inference of vesting of retiree health benefits in the collective bargaining context that has been upheld by the U.S. Court of Appeals for more than 30 years.

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