- Associated Press - Friday, January 31, 2014

DETROIT (AP) - Bankrupt Detroit and its retirees reached an agreement in a health insurance dispute that may end a lawsuit against the city.

Retirees filed suit in November to stop the city from shifting retirees to Medicare and giving those under age 65 a $125 monthly stipend to get their own insurance.

The parties reached a deal in principle Thursday night covering benefits through the end of 2014, mediators in Detroit’s bankruptcy said Friday in a statement.

Some features of the deal include the increase to $300 in the monthly stipend for retirees over age 65 who are not eligible for Medicare. The stipend for retirees under age 65 will be upped to $175 if the household income is less than $75,000 and the retiree acquires insurance under a health care exchange.

A court hearing set for next week has been canceled.

“The settlement was reached after intensive bargaining sessions over the past few weeks,” mediators said.

The office of state-appointed emergency manager Kevyn Orr said Friday in a release that the city also will extend the deadline to Feb. 7 for Medicare-eligible retirees to opt out of a city-sponsored Medicare Advantage plan.

“The agreement must be reduced to writing and approved by the respective clients,” Orr’s office said. “Once executed, the lawsuit will be dismissed.”

Orr was hired last March to fix Detroit’s finances. He has said Detroit’s debt is at least $18 billion and filed for bankruptcy in July. The city’s bankruptcy petition was approved in December.

Earlier this week, he submitted a preliminary plan for restructuring Detroit’s debt to city creditors. He expects to file the plan in bankruptcy court in about two weeks.

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