The end of 2009 marked another turning point in the way automakers' do business. Ford Motor Co. completed the transfer of its United Auto Workers (UAW) retiree health care liabilities to the UAW Retiree Medical Benefits Trust, also known as the Voluntary Employees Beneficiary Association (VEBA) Trust.

As a part of the 2007 contract negotiations with the Big Three U.S. automakers, the UAW union agreed to establish a VEBA that would fund retiree health coverage. Based on Ford's terms with the UAW, the automaker agreed to contribute $13.2 billion to the VEBA.

The completion of the transfer means that the UAW VEBA will now provide retiree health benefits to eligible UAW Ford hourly employees and their spouses and dependents, according to a filing with the U.S. Securities and Exchange Commission.

This also means that Ford takes on $7 billion in debt for health care trust.

The transfer of these health care liabilities to the VEBA Trust is the culmination of several years of work and will significantly improve our competitiveness in the U.S.," Lewis Booth, Ford's chief financial officer, said in a Ford press release. "We have removed a substantial health care liability from our balance sheet and have significantly reduced health care expenses. We also have shown confidence in our liquidity and One Ford plan by pre-paying $500 million of debt owed to the VEBA Trust.

For more information on retiree health obligations, see Thompson Publishing Group's Employer's Guide to Self-insuring Health Benefits.