February
27, 2012
Dear Kodak
Retiree, LTD Recipient or Survivor:
Eastman
Kodak Company and its U.S.
- § To enhance the Company’s liquidity position in order to maintain the confidence of and relationships with our vendors, suppliers, and customers;
- § To spur the monetization of the Company’s valuable intellectual property and fully enforce our intellectual property rights against industry participants that have infringed our proven and valuable digital imaging patents;
- § To fairly apportion our legacy costs for a company of the size we are today; and
- § To maximize the value of the Kodak enterprise for all of our stakeholders by reorganizing around our commercial and consumer business units.
Among
the legacy costs that
must be addressed as part of our reorganization are retiree health care costs
that are not borne by many of the companies we compete against in the
marketplace. As we have changed these benefits over time, we have always
tried to balance the needs of our retirees with the needs of the Company. It is now clearer than ever that in order to
remain a participant in the market tomorrow, we must put Kodak on a sustainable
financial path today.
You are receiving the
enclosed legal motion because there is an important hearing scheduled on March
20, 2012, at which time the U.S. Bankruptcy Court will consider a planned
change in Kodak retiree medical coverage that we believe will affect you. This letter summarizes the proposed change,
which we believe represents a necessary step in Kodak’s efforts to become a
competitive and sustainable enterprise during and after its Chapter 11
reorganization process. We urge you to read the entire legal motion enclosed
with this letter and
to consult an attorney with any questions
you may have.
The
motion filed by the Company would discontinue retiree benefits under Kodak’s medical plan (defined
in the motion as “Medicare Enhanced Benefits”) for the following individuals
who have attained age 65 (regardless of Medicare eligibility) or are under age
65 and Medicare eligible:
- § Former employees who retired on or after October 1, 1991;
- § Former employees who became eligible for long-term disability benefits on or after October 1, 1991;
- § Current employees who are retirement eligible when they leave the Company; and
- § Survivors and dependents of these individuals.
A hearing
to consider the motion is scheduled to occur in the United States Bankruptcy
Court for the Southern District of New York (located at One Bowling Green, New
York, New York 10004) on March 20, 2012.
Pending approval of the Bankruptcy Court, this change will become
effective on May 1, 2012.
Our
ultimate objective is to preserve a set of retiree benefits that are most
critical to our retiree population and which would be difficult to
replace. Preserving these most critical
benefits must be accomplished within the bounds of affordability for the Kodak
that will emerge from Chapter 11. As
such, this proposed change to retiree medical benefits represents one important
step in an ongoing process to address Kodak’s legacy costs and enable the
Company to move toward a more sustainable path.
We
understand that this change will be difficult. However, individuals affected by
this change who have Medicare coverage will continue to be covered by Medicare,
and will typically have access to a variety of other insurance options
available in their community to supplement their Medicare coverage. In some cases, the costs associated with
these options may be lower than what you are now paying under the Kodak
plan. All affected individuals will also
have the opportunity to elect COBRA continuation coverage under the Kodak
plan. More details on COBRA coverage
will be provided at a later date.
We
are committed to keeping you informed throughout this process. To help us
deliver timely communications to you, we need your help. If you would like to receive such
communications electronically, please go to the retiree tab of the Kodak
Transforms website at www.kodaktransforms.com and look for instructions for how
to subscribe to future e-mail notifications.
We
encourage you to review the Question & Answers included with this letter. If
you have additional questions now or in the future, please call the retiree
information hotline toll-free at (888) 249-2721, or visit www.kodaktransforms.com.
You
may access a copy of motion (and accompanying notice) directly by clicking the
“Information for Retiree Medical Beneficiaries” option on our claims agent’s
web site at www.kccllc.net/kodak.
Sincerely,
Patrick M.
Sheller
Senior Vice
President, General Counsel,
Secretary
& Chief Administrative Officer
Eastman Kodak Company
Enc.
All
benefits information in this document is subject to applicable law and the
terms of the relevant plan document, which will govern if there are any
differences. The Company reserves the
right to amend or terminate any benefit plan at any time.
Questions &
Answers
The
following questions and answers have been prepared to help respond to questions
you may have about this proposed change to Kodak retiree medical coverage. Please note that the term “retirees” also
includes LTD recipients, survivors and dependents.
Q. Why is
Kodak making this change to retiree medical coverage? Will it be the only change?
A.
This change is one of many difficult but necessary decisions the Company
needs to make in order to establish a financially sustainable course for the
future. Fairly managing legacy costs is
one of the key objectives Kodak must achieve during its Chapter 11
reorganization in order to continue delivering value to its stakeholders in the
years ahead.
Q. I’m
eligible for Medicare, but my covered dependents are not. What happens to their coverage?
A. Kodak
medical coverage for dependents who are under age 65 and not eligible for
Medicare will not be affected by this change until they become age 65 or become
eligible for Medicare, whichever occurs first.
As a result of this change, however, the cost of their current coverage
may increase.
Q.
I’m not eligible for Medicare, but my covered dependent is. What happens to our coverage?
A. You will continue to be covered under Kodak’s medical
plan but your dependent will lose his or her coverage.
Q. Why are retirees who reached age 65 or are on
Medicare losing coverage but pre-65 retirees aren’t?
A. We are taking this
step now in light of two important realities:
1) Kodak must adopt a more competitive cost structure; and 2) those
affected by this change are typically covered by Medicare and should have ready
access to other options to replace this supplemental coverage.
Q.
Will I have to pay more for coverage than what I am paying today through
Kodak?
A. Not
necessarily. Many retirees with Medicare
coverage will have access to insurance options that supplement their Medicare
coverage with no monthly premiums that are comparable to what they have through
Kodak.
Q. I am
currently not eligible for Medicare, but will be in the near future. What will happen to my coverage when I become
eligible for Medicare?
A. Prior to becoming eligible for Medicare, you
will need to enroll in Medicare Parts A & B. Once enrolled in Parts A & B, if you want
to pursue further coverage, you will need to evaluate the medical options
available to you in your area.
Q.
When will we know whether or not the court approves the motion?
A. The hearing is scheduled for March 20,
2012. It is difficult to determine when
the Court will make its ruling, but you will be informed as soon as possible
once a ruling has been made.
Q. Where can I
go to get information about insurance options to supplement my Medicare
coverage?
A. The options vary depending on where you
live. You can contact local insurance
companies to find out what options are available in your area. You can also contact the Centers for Medicare
& Medicaid either by phone at 1-800-MEDICARE or go to the Medicare website
at www.medicare.gov and go to the Medicare Plan Finder tool. In order to get an accurate comparison of
what you have today, you’ll need to select “Medicare Health Plans with drug
coverage”.
Q.
Is there any action that I need to take now?
A. If you are eligible for Medicare, you can
start exploring the available insurance options in your area to determine which
one will best meet your needs.
All
benefits information in this document is subject to applicable law and the
terms of the relevant plan document, which will govern if there are any
differences. The Company reserves the
right to amend or terminate any benefit plan at any time.
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