IBM retirees: 110,000 to be moved off health plan
IBM聽plans to move many retired workers off its health plan and give them money to buy coverage on a health-insurance exchange. The move is part of a corporate trend away from providing traditional聽retiree聽health benefits as costs rise.
The company says it acted after projections showed that costs under its current plan for Medicare-eligible聽retirees will triple by 2020 and that the increases would be paid by聽retirees聽through premiums and out-of-pocket costs.
An聽IBM聽spokesman said Saturday that the change will affect about 110,000聽retirees聽who are eligible for Medicare.
Under the change,聽IBM聽will make annual contributions to health-retirement accounts.聽Retirees聽would use the money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange.
The change affects medical, prescription drug, dental and vision coverage.
The company is meeting with聽retirees聽around the country to explain the change. About 1,300聽retirees聽attended the first one this week in San Jose, Calif. The next is planned for Monday in Austin, Texas.
IBM聽acknowledged that "some聽retirees聽may be skeptical" about the changes. But it said the health exchange, Extend Health, will offer benefits not now available under聽IBM's聽group plans and possibly at lower cost to聽retirees.
Spokesman Douglas Shelton said聽IBM聽capped health subsidies to聽retirees聽in the 1990s, and so higher costs would mostly lead to higher premiums and out-of-pocket costs for聽retirees.
Other large employers are also moving away from聽retiree聽health benefits. American Airlines parent AMR Corp., for example, is seeking approval for the change from a federal bankruptcy court judge.
A Kaiser Family Foundation report issued last month found that among companies with at least 200 workers, 28 percent that provide health benefits also offer聽retiree聽coverage.
The study's authors said few large employers have turned over benefits for workers or聽retirees聽to private exchanges like Extend Health. But they said 29 percent of companies with at least 5,000 workers are considering it.
The authors said there could be "a significant change in the way that employers approach health benefits and the way employees get coverage, with employers playing a less active role."
