IBM Retirees Moved From Health Plan To Cut Costs

IBM retirees are being pushed out of the company's health care plan as it offers them the option of buying coverage on a health-insurance exchange. The company's move comes in response to rising costs and in line with many companies who are scrambling to save on employee health benefits. IBM said this week that recent projections show that under its current Medicaid plan, costs to cover employees will triple by 2020. It is attempting to circumvent the costs by having employees pay through premiums and out-of-pockets fees. The change will affect around 110,000 Medicaid-eligible retirees, a spokesman for the company told reporters Saturday. IBM will make annual contributions to its health-retirement accounts, allowing retirees to use the money toward Medicare Advantage or supplemental Medigap under the Medicaid exchange.

This transition provides more choice and flexibility at equal or better costs to our retirees... While some retirees may be skeptical today, studies show that the majority of people who are presented the concept of an exchange are skeptical at first, but once they understand the options available to them through these exchanges, they have a more positive outlook," IBM said in a statement. Medical, prescription drug, dental and vision care are the facets of health-coverage plans affected by the change. The company is meeting with employees nationwide to discuss the impending change.

Extend Health, the health exchange, will offer some services not presently provided by IBM's health plan, potentially at a lower cost to retirees, the company said. The comapny capped health subsidies for retirees in 1990s, which resulted in the higher premiums and out-of-pocket costs to reitrees, said spokesman Douglas Shelton. Moves like these are becoming more common as a Kaiser Family Foundation reported that out of companies with at least 200 employees, only 28 percent were part of a health plan that included coverage for retirees. Fewer large companies are participating in health exchange plans, but the survey notes that of companies with 5,000 employees are more, 29 percent are considering such a change.