Delphi seeks to end health benefits for retirees

— -- Delphi has asked a bankruptcy judge for permission to stop paying health care and life insurance benefits to its salaried retirees, according to a filing with the U.S. Bankruptcy Court in New York.

If the judge approves the request, filed Wednesday, those benefits would end April 1 for 15,000 Delphi salaried retirees, most of whom rely on the company to cover much of their medical, dental and vision insurance costs, and other related benefits.

Retirees older than 65 are eligible for Medicare, the government's health care program for elderly people, but Delphi also has asked to eliminate its supplemental insurance for Medicare.

The company, which has been struggling to leave bankruptcy, expects to save about $200 million through 2011 by eliminating salaried-retiree health care benefits, court documents said. It also would take more than $1.1 billion in liability off of Delphi's balance sheet.

Shedding that liability is expected to help the company attract the financing it needs to leave bankruptcy protection. The credit market has all but frozen to companies in the deteriorating automotive sector.

"These proposed actions would better position the company for emergence from Chapter 11," Delphi spokesman Lindsey Williams said in an e-mail Thursday.

If Delphi's request is approved, retirees could purchase insurance through the company and pay 100% of the cost.

The change would not affect health care benefits for current salaried workers, but those workers — about 9,600 in the United States — would not receive benefits after they retire.

Bankruptcy Judge Robert Drain is scheduled to hear Delphi's request Feb. 24.

Citing the bleak automotive market, Delphi acknowledged in court papers the hardship the cuts would mean for retirees, but said "reasonable business judgment no longer permits them to maintain discretionary benefit programs such as" benefits to salaried retirees.

In addition to cutting retiree health care benefits for salaried workers, Delphi also has suspended indefinitely an executive bonus plan and merit raises. Delphi didn't specify how much it would save with the move.