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February 8, 2015

Retiree Health Vested? Not so fast, says the Supreme Court (Article)

Very recently, the Supreme Court unanimously determined that an inference of vested retiree health benefits based on inconclusive language in a collective bargaining agreement can only be validated using ordinary principles of contract law [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)].  What this means, in laymen’s terms, is if retiree health benefits are spelled out in a collective bargaining agreement, the terms of a retiree health benefit only lasts as long as the clear terms of the agreement prescribed. 

 

The important takeaway for employers is to make certain that it always retains the reservation of the right to amend, modify or terminate benefit plans; and, that it is careful to not to agree to more than it is willing to commit to.

 

This Supreme Court’s decision brings the Sixth Circuit into alignment with other circuits that have, over the years, followed this path.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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