The Patriot Coal Retiree Committee represented the non-Union retirees in the Patriot Coal Chapter 11 bankruptcy case. When Debtor Patriot Coal sought to terminate all retiree healthcare benefits, the Retiree Committee fought back. As a result, a financial settlement was reached giving the Retiree Committee a lump sum settlement and certain monthly payments to be made by the Company through the lives of the affected retirees.
Since the retirees were a diverse group, it was decided that the monies should be used to set up a health reimbursement VEBA (HRA VEBA). The Patriot Coal VEBA allows its members to submit any taxable contributions they make toward the payment of any healthcare premium payments for reimbursement. Each Patriot Coal VEBA participant is allotted an amount for reimbursement that varies only with their Medicare status, with pre-Medicare retirees receiving about three (3) times as much as Medicare eligible retirees.
A unique cost-savings method has also been employed by the Patriot Coal VEBA Trust that encourages early use of the VEBA funds by its participants to minimize Third Party Administration (TPA) expenses. In this respect, once a yearly allocation in an individual account has reached a zero balance, the TPA need not service the account for the remainder of the year and thus is able to stop charging for the administration of such accounts. This will reduce the overhead and extent the amount of money to pay for benefits.
