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American Morning
Former Enron Employees Deal with Loss of Benefits
Aired July 25, 2002 - 07:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ARTHEL NEVILLE, CNN CORRESPONDENT: Well, the accounting scandals in corporate America have cost investors billions and thousands of employees their jobs. But for some there is a much deeper toll, including their health.
Jeff Flock reports.
(BEGIN VIDEOTAPE)
BILL PETERSON, FORMER ENRON EMPLOYEE: That's right, wear him down.
JEFF FLOCK, CNN CORRESPONDENT (voice-over): As he watches son Chris play with grandson Nathan, Bill Peterson tries to drink in all the life he can.
(on camera): Not to put too fine a point on it, but they told you you're going to die?
B. PETERSON: Yes.
FLOCK (voice-over): In about a month. Cancer. He only wishes his life was all that was lost.
CATHY PETERSON, WIFE OF B. PETERSON: We did lose everything. We lost our house.
FLOCK: House, car, job, retirement savings, explains wife Cathy. Bill worked at Enron.
B. PETERSON: I was in the middle of treatment for cancer.
FLOCK: Just finished chemo and surgery. They turned on the TV. There were people carrying out their boxes.
(on camera): Your friends?
C. PETERSON: Our friends. And Douglas, there's...
FLOCK: His colleagues?
C. PETERSON: There's Helen. Cathy, Cathy, there's daddy.
FLOCK: His employees? C. PETERSON: Yes. His workers.
FLOCK (voice-over): Still bloated from treatment and surrounded by family, Peterson calls Enron and is put on hold.
C. PETERSON: And she came back and Bill just gave us the thumbs down sign.
FLOCK (on camera): You had chemo.
B. PETERSON: Yes.
FLOCK: You had surgery.
B. PETERSON: Yes.
FLOCK: You were waiting to get radiation.
B. PETERSON: Correct.
FLOCK: And you get laid off.
B. PETERSON: I got laid off.
FLOCK (voice-over): Enron says because it had filed for bankruptcy, it had to lay Bill Peterson off. "The decisions were not ours alone to make," an Enron spokesman tells us. He says they weren't allowed to give Peterson special treatment, cancer or no.
B. PETERSON: We get asked a lot, are you bitter at Enron? No, I'm not bitter at Enron.
FLOCK: Nobody says Enron did anything legally wrong in what came next, but it's a window into what can happen to the most vulnerable employees of a company caught up in bankruptcy and layoffs.
C. PETERSON: Immediately we starting looking at our bills, what can we live without.
FLOCK: But they had a more pressing problem -- fighting cancer. Bill was supposed to wait a month after surgery to start radiation treatments. By law, even in bankruptcy, Enron had to let him continue to pay for his own insurance through the company, what's known as Cobra. But Peterson says he couldn't get confirmation, so he had his doctor give him the radiation immediately while he still had coverage.
(on camera): So that wasn't medically best for you?
B. PETERSON: No, it was not.
FLOCK: But you did it anyway?
B. PETERSON: Had to.
FLOCK (voice-over): He didn't have to, as it turned out. His insurance was continued. Not so, though, for his short-term disability. The law doesn't require companies to continue that through Cobra. Ironically, if he had made it to long-term disability, the coverage would have continued.
C. PETERSON: So he paid in all this money for his short- and long-term, which is supposed to protect you in case something just like this happens, he don't get it.
FLOCK: With no income or disability, the Petersons had to sell their modest Houston home and car and move in here with Cathy's sister.
C. PETERSON: Like someone says, when you get thrown off a mountain, you flap your wings and try to fly. And we've been thrown off the mountain and we're flapping.
FLOCK: Then came the news the treatment failed.
B. PETERSON: There's not a happy ending to this movie.
FLOCK: His only hope, a different ending for the next guy, maybe a law making it illegal to lay off people with life threatening illnesses or one that would require companies to continue all disability coverage after someone is laid off, even if the company goes bankrupt.
Bill Peterson doesn't blame anyone for cancer or for losing his fight. He just doesn't think he should have lost everything else with it.
I'm Jeff Flock, CNN, in Rusk County, Texas.
(END VIDEOTAPE)
NEVILLE: Well, is there any way to protect yourself in this climate of layoffs?
Here now to tell us how to keep your health and disability insurance when you need it most, "Smart Money" magazine's Lauren Young.
Good morning, Lauren.
LAUREN YOUNG, "SMART MONEY" MAGAZINE: Hi, Arthel.
NEVILLE: Now, in the package Jeff Flock mentioned Cobra. First of all, tell us what Cobra is and if I'm fired or laid off, do I automatically continue my health insurance coverage through Cobra?
YOUNG: Cobra is the -- it's not anything to do with reptiles. It's the Consolidated Omnibus Reconciliation Act, which requires insurers to carry your coverage after you're laid off. You can get Cobra for up to 18 months and you have a 60 day period to weigh in and decide if you want to get Cobra. But the bottom line is it's kind of expensive. It's actually very expensive.
NEVILLE: Really? So how much extra does Cobra cost? YOUNG: Well...
NEVILLE: And what does it cover?
YOUNG: Right. OK. It covers, it's your insurance. You're basically paying for your insurance to continue. So you're getting your same insurance, the same doctors, everything.
NEVILLE: So whatever you had before, it will continue -- dental, medical...
YOUNG: Exactly.
NEVILLE: ... eyes, everything.
YOUNG: Same plan.
NEVILLE: OK.
YOUNG: Basically you're buying your plan. You're just buying a continuation of it. But it's expensive. For an individual, $225 a month if they Cobra. Now, the average individual pays only $30 a month on average in all different kinds of insurance plans. For a family of four, it's $570.
NEVILLE: Gosh, that's a lot of money.
YOUNG: And for an individual, for a family of four if somebody's working and the employer is kicking in some of the money, it's only $150 a month. So that's a lot of money, a lot of money.
NEVILLE: That is a lot of money and a lot of people can't afford it. And I understand the deductibles on that are quite high, what, about $2,000 possibly?
YOUNG: That's your same deductible.
NEVILLE: So that's -- OK.
YOUNG: The option that you have, and I think what you're talking about is you do have an option. You can go out and buy short-term insurance and short-term only lasts for about six months. But it's not very comprehensive. Now, it is cheap. You're maybe, if you're a 40-year-old man, you're healthy, $50, $100 a month, a family, $150, $300 a month. So it's not as expensive but the deductibles can be up to $2,000 and it's not comprehensive. If you have asthma, if you're pregnant, forget about it. It's not going to work for you.
NEVILLE: So the short-term disability does not work if you're pregnant?
YOUNG: Right.
NEVILLE: Talk about long-term disability, because that's also a concern of a lot of people. How does this work? What's the process?
YOUNG: OK, now long-term disability, short-term disability, I should say, is six months.
NEVILLE: Short-term, right?
YOUNG: It's only three months usually.
NEVILLE: Three months?
YOUNG: It comes -- it's three months usually. And it pays up to 100 percent of your salary. So that's pretty good. But then you go on to long-term disability. That's 66 percent of your salary on average. That's what you typically get. And it can go on indefinitely but the way they define disability -- this is something the Supreme Court has actually bandied about -- is are you basically able to do your job? And it's a very narrow band as to whether you can do your job or not.
NEVILLE: See, but that's not fair. So suddenly here you are either laid off or fired and you're fighting to figure out what sort of insurance coverage you can get.
YOUNG: Oh, it's, certainly in the case that we just saw it's, it can be a real nightmare. And it's the last thing you want to deal with, obviously, if you're a sick person. Now, keep in mind that you can't get disability coverage if you're not employed. So it's really important to do it now. Only 40 percent of all Americans...
NEVILLE: Repeat that again. What did you say?
YOUNG: You can't get disability coverage if you're not employed, because what are they insuring you against? So go out and buy it now. It's really important. The Web is a wonderful resource. On our Web site at smartmoney.com and all over the Web, any financial Web site you can go and fill out some calculators to tell you how much insurance you need.
But it's really important. Only 40 percent of all Americans have disability insurance and it's very, very important, as we just saw in the last package.
NEVILLE: Absolutely.
Lauren, help me understand this. Now, is there a way that you can go and buy some sort of insurance in advance in the event I get laid off or I get fired?
YOUNG: You know, I'm surprised the insurance industry hasn't come up with that one yet, but we have terrorism insurance now but we don't have something like that. If you work for a union usually you, many unions will offer you something if something happens and you need to stop working. There's some kind of pool. But in general, no, there's nothing to ensure you against losing your job.
NEVILLE: Man, Lauren Young, thank you very much. A lot of important information, especially during these times.
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