If your General Motors vehicle has doors that close smoothly, you can thank Gethin Jones and his colleagues for that. Jones worked on the assembly lines at six plants over 33 years, assembling cars and repairing any defects before they made their way to a sparkling showroom.

“When the doors close nice and they don’t make a funny sound, I’m the guy who did that,” he says.

Jones, 56, retired from a GM plant in Georgia two years ago and moved with his wife to Fort Myers, Fla., where his pension check would stretch farther because the cost of living was less expensive.

Now, as the nation’s largest automaker filed Monday for bankruptcy protection, Jones will be relying on his pension to stretch farther still. He and 485,000 other retirees and their families face cutbacks in health care coverage, including the elimination of dental and vision care and an increase in prescription drug costs. The cuts were included in a contract between GM and the United Auto Workers (UAW) that was ratified last week.

Perhaps more disturbing, the union contract allows GM to replace more than half of the $20 billion it owes to the retiree health care trust fund with stock—the value of which remains as uncertain as GM’s future—and with a $2.5 billion note. The UAW acknowledged that funding the plan with GM stock will “greatly increase the risks being assumed by retirees.”

“Depending on the value of the company’s stock, the trustees of the retiree health care trust fund may have to make further reductions in benefits in the coming years,” the UAW said on its website.

Health Care Plan Underfunded

The plan (known as the voluntary employees’ beneficiary association, or VEBA), which is headed by an independent body and run by the UAW, pays for the health care costs of GM’s retirees and their spouses. According to a White House fact sheet on GM’s restructuring, the VEBA plan will also get 17.5 percent of the equity of the newly organized company and rights to purchase an additional 2.5 percent of the new GM.

Still, given the underfunding of the VEBA plan and the uncertainty of the value of GM stock, cuts to health care plans are most likely “just the beginning” for GM retirees, says Ellen O’Brien, a strategic policy adviser at AARP’s Public Policy Institute.

“The trustees of the plan are going to be faced with tough choices over the next few years about whether to cut benefits and shift cost to workers to extend the life of the fund,” she says. “The cuts are going to be especially painful for low-income retirees for whom comprehensive health benefits are key to their financial security.”

Paying out of pocket for dental services and treatment, including dentures, crowns and cleanings, will most certainly eat away at retirees’ pension and Social Security income because Medicare doesn’t cover those expenses in most cases. Nor does Medicare cover eyeglasses, eye exams or other related treatment for those 65-plus. Those services can be extremely costly for people on a fixed income, advocates say, and vital to older adults’ health and well-being.

Not surprisingly, many retirees say they’re frustrated with health care cutbacks that result from union contracts they don’t get to vote on. At a televised roundtable discussion in Detroit involving retirees, one man accused the union of failing to represent retirees’ best interests.

Looking Out for Retirees

UAW President Ron Gettelfinger takes issue with that. “The UAW has a proud history of looking out for our retirees,” he told AARP Bulletin Today. “In accordance with our constitution, retirees do not vote, but that does not mean we do not represent them.”

He says that all stakeholders at Chrysler and General Motors, including active and retired UAW members, were required to make sacrifices. “We did the best job we possibly could under the circumstances,” he says. “Pensions are protected, and core retiree health care benefits remain intact. We did this to secure government funding for the automakers to keep them from liquidation, in which case our pensions would have been reduced and retiree medical coverage would have been terminated,” he says.

Health care costs for older Americans have been rising faster than inflation for years, pushing many to the brink of financial ruin, says Richard Johnson, a senior fellow at the nonprofit Urban Institute. Even those in the best of circumstances—retirees with company-sponsored benefits—face out-of-pocket health care costs that grew from an average of $2,200 in 2001 to $3,000 in 2006.

“What we’ve seen is that there’s a big increase in [health care] premium payments that older people have to pay for their benefits, and that’s been driving increases in out-of-pocket payments of people at older ages,” he says. “The loss of retiree health benefits, or even cutbacks, could have serious repercussions for older people.”

The health care reductions to GM workers, slated to take effect in July, were similar to those facing 144,000 Chrysler retirees after it declared bankruptcy in April. After a revised contract between Chrysler and the UAW, retirees saw cuts in dental, vision and drug coverage.

GM’s Pension Safe for Now

On the bright side, GM retirees won’t have to worry about their pension plan, one of the largest in the nation, at least for now. It will remain ongoing for more than 670,000 current and retired workers, says Jeffrey Speicher, a spokesman for the federal Pension Benefit Guaranty Corp. (PBGC), which insures such plans. But like its retiree health care plan, GM’s pension plan, with $80 billion in assets, is underfunded by $20 billion as of last November, he adds.

If GM had liquidated its assets or terminated the pension plan, the PBGC would have taken on that obligation but tens of thousands of people would have seen a reduction in benefits, Speicher says. Retirees at age 65 could collect the maximum benefit of $54,000 a year, but younger retirees wouldn’t make out nearly as well. The maximum annual benefit for a 50-year-old is $18,900.

“For 33 years, I worked for GM and they promised me a pension and health care benefits, and every day they asked me for a full day’s work in return,” GM retiree Gethin Jones says. “This isn’t something we were given. This is something we’ve earned over 33 years, and we have every right to assume we’ll be receiving them.”

Retirees worried about the future of their benefits have flooded the telephone lines at some of the nine UAW retiree chapters in Florida, including the office headed by Fred Fabi in St. Petersburg. He says an estimated 40,000 GM retirees live in the state.

Fabi, 82, who worked as an inspector and test driver for GM, says some retirees struggling to make ends meet will likely move in with their adult children as a result of the cutbacks. Others will face decisions about whether to buy food, fill prescriptions or see a dentist.

“We’ve been getting so many calls from our retirees. They just don’t know what they’re going to do,” he says. “Our retirees have worked hard all their lives, and here you see everything you ever worked for just going down the drain.

“People will just go without,” Fabi says. “They won’t have a choice. They won’t be able to get dentures. They won’t have enough money to buy prescriptions and food. They’ll have to make an honest decision on where those few dollars they’re getting are going to go. It’s demoralizing. We deserve better.” 

Carole Fleck is a senior editor for AARP Bulletin.