IBM Will Move Retirees Off Company-Sponsored Health Plan

IBM has announced that it plans to move about 110,000 retirees off its company health insurance plan and offer a payment to purchase coverage on a private health insurance exchange instead.

The Wall Street Journal said early Saturday that the move is “a sign that even big, well-capitalized employers aren’t likely to keep providing the once-common benefits as medical costs continue to rise.”

According to the WSJ, the decision will affect all IBM retirees once they become eligible for Medicare and will relieve the company of the responsibility of managing retirement health-care benefits. IBM said the growing cost of care has made its current system of keeping retirees on its company health care insurance unsustainable without large increases in premiums.

According to the report, IBM’s chief health director Kyu Rhee has issued notices informing retirees that in order to keep health insurance coverage they will be required to choose a plan offered through Extend Health, a large private Medicare exchange run by Towers Watson & Co, a New York company.

IBM reportedly informed its retirees that its current coverage will end for Medicare-eligible individuals after December 31st.

“Cost increases under our current retirement group health care plan are no longer sustainable for you,” IBM said in the notices. “Health care costs under IBM’s current plan options for Medicare eligible retirees will nearly triple by 2020, significantly impacting your premium and out of pocket costs.”

IBM plans to offer retirees an annual contribution through a health retirement account that can be used to buy Medicare Advantage plans and supplemental Medicare policies on the exchange. Those retirees who don’t enroll in a plan through Extend Health won’t receive the subsidy.

The report indicates that Extend Health has signed up about 300 companies, including DuPont Co. and Caterpillar, Inc.

IBM and Extend Health reportedly indicated that nearly all retirees will be able to enroll in plans that will be of equal or better value to plans IBM currently offers.

The WSJ, however, reports that some union groups and retirees objected. Lee Conrad, national coordinator for the IBM Global Union Alliance, said the worker group “sees this as just another take-away of retiree and employee benefits.”


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