WELFARE BENEFIT PLAN RIGHTS MAY BE VESTED

By: Kathleen Bray
In 2004, Great-West Life and Annuity Insurance Company decided to terminate medical coverage for former employees receiving long term disability benefits. The Company had clearly reserved the right to amend or terminate the plan, but it included language in the plan that limited its rights by stating that “no such modification shall divest a Participant of benefits under the Plan to which he has become entitled prior to the effective date of the amendment.

” This language was considered ambiguous and therefore the Court remanded the case to the District Court to provide extrinsic evidence on whether the benefits should be considered to be vested upon disability. The Court did determine that the letter and amended summary plan description were sufficient action by the Company to eliminate any future obligation to employees disabled after the date of the notice. Halbach v. Great-West Life and Annuity Insurance Company (8th Cir. 2008).

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