Retirees at insurer lose their benefits

About 2,000 retirees from LandAmerica Financial Group lost health-care benefits or life insurance this week after the company canceled their coverage to cut costs.

The benefits were halted Monday at 11:59 p.m., but many retirees first learned of the cancellation yesterday.

Marie Jennings' father found out when he tried to fill a prescription at Wal-Mart and was turned away.

"I can't believe they would cancel your insurance right in the middle of the month," said Jennings, a Mechanicsville resident. "That was part of the retirement package."

Henrico County-based LandAmerica's board of directors voted to stop insurance benefits on Monday, two days before the company filed for bankruptcy and announced the intended sale of three of its subsidiaries.

A letter to retirees announcing the change, dated Wednesday, began arriving yesterday.

"It's a shame the firm was unable or unwilling to get in touch with those folks," said Richard Coughlan, a senior associate dean at University of Richmond's Robins School of Business. "The company, it seems, did not have the time to deliberate these matters."

Company spokeswoman Lloyd Osgood said the gap was unintentional. The firm wanted to file for bankruptcy and cancel retiree benefits the same day, but the Chapter 11 petition was delayed, she said.

She said the company did not have money to fund the life insurance, health, dental and prescription coverage.

Employees' benefits are unaffected, she said.

Retirees 65 or older are eligible for the federal Medicare program. Those who are younger or who want supplemental insurance can continue health coverage through the Consolidated Omnibus Reconciliation Act of 1986, or COBRA.

COBRA coverage is more expensive because it allows people to stay with their same plans and doctors, but the patient must pay the full cost. There is no employer contribution.

"They'll get the same amount of coverage, but they won't have the same price," said Michelle Oliver, owner of The Oliver Financial Group, an insurance and financial planning firm in Henrico. "They'll have to pay more for it."

If retirees enroll in new coverage within 63 days, they will be able to get a waiver from any pre-existing condition exclusions in policies.

For the life insurance coverage, retirees have 31 days to convert their policies.

"For an older person . . . their life insurance is going to be through the roof," Oliver said, "because you're getting your life insurance at age 65, not at age 30, 40 or 50."

About 1,100 retirees with health insurance and 900 with life insurance are affected, Osgood said.

LandAmerica is the third-largest title insurance company in the U.S. The company has been hit by a slowing housing market and the credit crunch.

The firm agreed on Nov. 7 to merge with larger rival Fidelity National Financial of Jacksonville, Fla. After two weeks of researching LandAmerica's books, the company walked away from the deal. The firm came back Wednesday and agreed to buy three of LandAmerica's insurance-underwriting subsidiaries.

LandAmerica held on to one smaller underwriter but will be only about 10 percent of its former size if the deal goes through, Osgood said.

At the same time the sales were announced, the holding company and a subsidiary, LandAmerica 1031 Exchange Services Inc. filed for Chapter 11 bankruptcy protection.
Contact Emily C. Dooley at (804) 649-6016 or .