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IBM To Move 110,000 Retirees From Its Sponsored Health Care Plan To Private Exchanges. Other Companies Plot Similar Moves

IBM, Inc. logo Earlier this week, IBM announced that it will move about 110,000 Medicare-eligible retirees from its current company-sponsored health plan to private health care insurance exchanges. Retirees will receive payments towards the cost of health care through exchanges.

While IBM denied that costs were the reason for the move, the news report stated that experts have estimated Medicare costs to triple by 2020. So, while the move may not save IBM any money today, it seems the company's decision is clearly cost-related -- to save itself money in the future.

Reportedly, the new plan for IBM retirees will start January 1, 2014. According to the Chicago tribune:

"IBM also said it was hosting meetings with groups of retirees across the country to inform them about the move to the country's largest private Medicare Exchange. While some retirees may be skeptical, studies showed that the majority of people have a more positive outlook once they were presented with the concept and understood the options available to them through these exchanges..."

Health care exchanges were created under the 2010 Affordable Health Care Act. At many health care exchanges, open enrollment will begin on October 1, 2013. A health care exchange is:

"... a regulated marketplace where consumers can more easily compare insurance plans through the Internet, on the phone, or through an official helper, called a “navigator.” Consumers can also find out if they qualify for Medicaid -- the jointly run federal/state health care program for the poor -- or for a federal subsidies to help pay for the insurance... They are for small businesses and people who don’t have access to affordable insurance through an employer or are not already enrolled in a government program, such as Medicare."

Experts have projected that the shift to private health care exchanges will affect both retirees and current employees. (I'll bet you didn't know that.) The projections include 1 million workers enrolled in private health care exchanges in 2013, increasing to perhaps 40 million workers in 2018.

United Parcel Service logo Other companies have announced similar health care plan changes for their retirees, including General Electric and Time Warner. Last month, the United Parcel Service announced that it will stop health care coverage for employees' spouses, who can get coverage through another employer's plan:

"By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional... next year, 12% of employers plan to exclude spouses, up from 4% this year, according to a recent Towers Watson survey."

Local leaders in some states, such as North Carolina, are hosting forums to explain to residents what health care exchanges are and how they operate. The insurance commissioner in Maryland has already published rates available in the state's new health care exchange; with some rates are as low as $122 per month.

What is your opinion of private health care exchanges? What is your opinion of employers that no longer cover their employees' spouses?


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