Every week, Mike Mormile receives up to 50 calls from retirees and widows who can't pay a prescription-drug bill or who missed a mailing explaining medical benefits. One man said he was going to have to sell his house to keep buying his infirm wife's medicine.

Mr. Mormile isn't in human resources, insurance, or politics. He's a member of the United Steelworkers union, and one of the four people overseeing a special trust that provides certain benefits to thousands of retired steelworkers and their spouses who lost all of them when Bethlehem, LTV, Acme Metals and Georgetown Steel went bankrupt between 2000 and 2003. His job is to help determine when to add a new benefit or cut a program or increase premiums. Sometimes he can help the caller, sometimes not. To please everybody, he says, "we'd be out of money in a matter of months."

As more companies look for ways to shed the burden of funding open-ended retiree health benefits -- so-called legacy costs -- and more unions try to keep some of them, his experience offers a glimpse of what to expect.

Faced with crippling legacy costs, more companies are considering the trust approach. The Steelworkers and Goodyear Tire & Rubber Co. agreed last month that the company will make a one-time payment for retiree health benefits into a trust. The trust would be governed by a committee consisting of three members designated by the Steelworkers and four independent members jointly selected by Goodyear and the union. That committee would manage the trust's assets and maintain the benefit programs. The union and the company will no longer bargain over retiree health benefits, according to the union.

Executives at General Motors Corp. and other big auto makers recently expressed interest in the Goodyear agreement, because a similar deal could allow them to relinquish the massive, but unfunded, amount of money needed for retiree health-care benefits they currently carry on their books.

Such agreements effectively mean "the employer is getting out of the retiree medical-coverage business," says Russell Greenblatt, a partner with the law firm Katten Muchin Rosenman LLP in Chicago, which has worked with companies to set up similar trusts.

Goodyear agreed to put $1 billion into the trust and to provide for cost-of-living allowance and profit-sharing contributions that the union estimated could amount to an additional $135 million. However, the trust is $200 million short of estimated future retiree medical costs.

"If they have really good investment returns, they can say, 'We're going to improve the benefits,' " says Derek Guyton, a principal with Mercer Health & Benefits in Chicago, who estimates that 25% of large companies have a version of these trusts. But poor returns could easily result in higher co-payments for retirees or the need to trim benefits, he says.

The Teamsters set up a union-funded trust in 2001 that now covers about 15,000 retirees who didn't meet the eligibility requirements of their company's plan. To receive benefits from the trust, the retirees have to pay a monthly premium, which the union had been able to keep flat until this year. Effective March 1, some premiums will increase between 3% and 10% for some retirees. For a low-cost plan with a $500 deductible and basic medical coverage up to $100,000, average $250 monthly premiums are increasing $25.

John Slatery, director of the benefits department at the Teamsters, says he tries to keep costs down by directing members to discounted networks and generic drugs and by getting them more involved in their health-care decisions. He says the trust receives and disburses about $15 million a year and has reserves of about $4 million.

Mr. Slatery says the trust operates like a small insurance company, but he outsources many administrative and other functions and has only one full-time and several part-time people assigned to the trust. He sees further premium hikes ahead. "We're going to have to pass the costs on, or reduce benefits or come up with more efficient ways of providing it," he says.

The trusts that are used to pay for retiree health-care benefits are created through an organization called a voluntary employees' beneficiary association. VEBAs have been around in various forms since the 1920s but have proliferated in the past t 10 or so years due to accounting rule changes and as more companies take advantage of tax benefits on the money they contribute to VEBA trusts, says Mark Wilkerson, a consultant in Spokane, Wash., who helps state and local governments set up VEBAs. There were about 12,500 VEBAs in 2005, according to the Internal Revenue Service.

Bankruptcies in the airline and steel industries that led to the loss of retiree medical benefits for tens of thousands of workers, have made VEBAs more attractive to unions. Unlike pensions, which are guaranteed by the federal Pension Benefit Guaranty Corp., retiree health-care benefits are not protected by the government.

The United Steelworkers trust that Mr. Mormile helps run, created in 2002, grew out of discussions between the leaders of the union and investor Wilbur Ross, who wanted to buy the bankrupt steel makers without assuming legacy costs. The union, trying to save jobs for current workers but also protect its retirees, suggested forming a trust fund to pay for some benefits. It also agreed to manage the fund through a committee of three representatives from the union and one from the company.

Mr. Mormile and the three other committee members meet once a quarter to discuss the state of the trust and options for adding new benefits for retirees. Unlike the Goodyear plan which has a limited company contribution, the steelworkers fund also receives contributions from Mittal Steel Co., which bought out Mr. Ross's company, based on earnings and steel shipments.

At first, the fund had only $20 million to $30 million, and couldn't provide any benefits, leaving retirees with only Medicare or any insurance they might be able to buy on their own. As steel-industry profits have grown, the fund has received more contributions and began offering benefits in 2005, three years after the fund was established.

After listening to retirees, the committee decided the biggest expense was prescription drugs, and offered a prescription-drug plan. Under the plan, retirees pay $10 a month, which entitles them to unlimited generic drugs with a $5 co-pay, and coverage of up to $6,000 a year in brand-name prescription drugs. Last year, it also decided to reimburse 41,000 retirees for Medicare premiums paid in the first six months of the year.

Doing so has been difficult at times. More than 100 retirees said last year that they missed an August deadline to sign up for the Medicare reimbursement, because the mailing list provided by bankrupt steel companies was incomplete.