Possible Megacorp Retiree Health Care Changes

[Brett_Cameron]

Has anyone Read this article:
Retiree health benefits: Facing extinction? - Elizabeth O'Brien's Retire Well - MarketWatch

With early retirees guaranteed access to health insurance, many companies are considering dropping their coverage for this segment of the population, experts say. Some instead are considering giving their employees money to use on the public exchanges. 3M plans to shift early retirees from their current coverage, which is similar to what active employees receive, over to the public exchanges in 2015, with company contributions to health reimbursements accounts helping to defray retirees’ costs.

I have not heard of any changes from my Megacorp yet, but I do expect things to change somehow. My old Megacorp currently pays 75% of my healthcare policy and half of the dental and vision premiums. They self-insure with the plans administered by Aetna.

 

[gerrym51]

if your company gives you early retiree medical insurance they just may say heres' some money as our share-go buy your own-probably still a good deal

 

[W2R]

Has anyone Read this article:
Retiree health benefits: Facing extinction? - Elizabeth O'Brien's Retire Well - MarketWatch


I have not heard of any changes from my Megacorp yet, but I do expect things to change somehow. My old Megacorp currently pays 75% of my healthcare policy and half of the dental and vision premiums. They self-insure with the plans administered by Aetna.

Interesting article, thanks! I forwarded it to Frank, since he has retiree medical coverage presently, but has to pay somewhere around $800-$900/month for his share of the cost, IIRC. Due to pre-existing conditions that has been his only option up to now, but he might be able to do better with subsidized insurance from the exchanges. (Fortunately, knows somewhat more about this than I do but he is still working on it).

He has not heard anything from his Megacorp yet either. They also self-insure with plans administered by Aetna so it could even be the same Megacorp.

 

[eytonxav]

I have heard this suggested before. I suspect it will come down to a decision by each mega-corp, and such decision are usually driven by what will cost them less.

I actually have a heathcare benefit from my former mega-corp that will guarantee my benefit, so in my case they will not have that choice.

 

[ziggy29]

It wouldn't be a terrible thing if it were "revenue neutral" (i.e. if the Megacorp actually gave you the same amount of cash as it spends on the insurance), except that when you buy it yourself as a retiree, it's not tax deductible except to the extent that you exceed 10% of AGI on medical expenses, and the cash payment is probably taxable.

It's another example of the inequity in the tax code between employer-provided coverage and policies purchased directly by the individual.

 

[ziggy29]

I have heard this suggested before. I suspect it will come down to a decision by each mega-corp, and such decision are usually driven by what will cost them less.

Well, if it costs them (say) $500 per month, they'll probably just give you $500 per month, or add $500 into a monthly pension payment -- and not adjust it for inflation, let alone keep up with rising health insurance costs.

 

[Katsmeow]

Like many apparently, DH retired from a Megacorp that offers a self-insured retiree plan through Aetna. Megacorp partially subsidizes the coverage (they do not absorb all increases in premiums). One of the things in the back of my mind is that they could drop the plan and put us into exchanges. I don't think that we will qualify for subsidies (at least not without some real planning). I would hope that if they did this they would give some sort of amount of money to help pay for that but it is possible they wouldn't.

 

[wmc1000]

If only I had worked for a megacorp.... We are on our own!

 

[gerrym51]

If only I had worked for a megacorp.... We are on our own!

i worked for a megacorp-no retiree health care

 

[sengsational]

i worked for a megacorp-no retiree health care

I worked for two Fortune 50's and no retiree HI.

 

[JoeWras]

My megacorp offers it at cost. The premium will be very close to the ACA plans -- judging from some of the initial calculators out there.

The nice thing is today you don't have to worry about pre-existing conditions. Also, the group is a relatively healthy bunch. Additionally, the network is widely accepted by physicians, so it leans towards being better than ACA exchanges.

That said, I don't know what Megacorp will do. I wouldn't be surprised if they don't just bail.

 

[bUU]

Retiree health benefits have typically been a way of attracting and retaining good people, but it seems like companies have less and less concern about such things. I chalk this up to yet-another casualty of off-shoring. It is amazing just how much reach this trend has.

 

[wmc1000]

Of the 4 companies I have worked for during my almost 40 year career, including a couple of reasonably large ones, none has ever had a retiree health program.

 

[HighRoller]

I suspect it will come down to a decision by each mega-corp, and such decision are usually driven by what will cost them less.

+1 I worked for 2 different mega corps over 40+ years and lower cost drove them in most cases.

 

[JakeBrake]

The October Surprise. My former Megacorp announces the retiree health insurance coverage and premiums in October of each year for the next year. So, I am waiting for the October Surprise.

 

[MBAustin]

I suspect the article author is correct when she states that "retiree medical" will vanish completely in less than a generation. ACA certainly changes the landscape, especially for those who ER.

 

[ziggy29]

I suspect the article author is correct when she states that "retiree medical" will vanish completely in less than a generation. ACA certainly changes the landscape, especially for those who ER.

I think so. For better *and* for worse, PPACA will do to employer health insurance (especially for retirees) what the 401K did to DB pensions.

 

[Brett_Cameron]

I think so. For better *and* for worse, PPACA will do to employer health insurance (especially for retirees) what the 401K did to DB pensions.

I agree.

 

[teejayevans]

I suspect the article author is correct when she states that "retiree medical" will vanish completely in less than a generation. ACA certainly changes the landscape, especially for those who ER.

Since there no penalty for companies not providing retiree health insurance I bet it happens faster than that
TJ

 

[bUU]

There's never been a penalty for companies not providing retiree health insurance. The biggest change that ACA represents, in that regard, is that it provides a softer landing pad for companies that decide to end retiree health insurance - softer than those retirees would have encountered if ACA wasn't there.

 

[ziggy29]

There's never been a penalty for companies not providing retiree health insurance. The biggest change that ACA represents, in that regard, is that it provides a softer landing pad for companies that decide to end retiree health insurance - softer than those retirees would have encountered if ACA wasn't there.

Yes, it will become much easier for employers to just cancel their own plans, hand out a commensurate pile of cash to employees and tell them to buy their own on the exchanges than it is to pull the plug and tell them to navigate the pre-2014 world of individual insurance and no subsidies. Just like with switching from DB pensions to 401K plans, they can shift from funding an unknown future cost into a known future cost, and they like the certainty of the latter.

The difference, again, is that when the employee buys it with employer-provided money, it's taxable to the employee (except to the extent it exceeds 10% of AGI), but when given the direct benefit it's not.

 

[MichaelB]

Yes, it will become much easier for employers to just cancel their own plans, hand out a commensurate pile of cash to employees and tell them to buy their own on the exchanges than it is to pull the plug and tell them to navigate the pre-2014 world of individual insurance and no subsidies. Just like with switching from DB pensions to 401K plans, they can shift from funding an unknown future cost into a known future cost, and they like the certainty of the latter.

The difference, again, is that when the employee buys it with employer-provided money, it's taxable to the employee (except to the extent it exceeds 10% of AGI), but when given the direct benefit it's not.

And they are doing just that. The article says more than half have already eliminated the retiree benefit, and we know the courts do not view health care as a vested right.

A benefit worth $1K per month, now taxable, means $12k in additional income, some of which may be treated as a deduction. Even a best case means some additional tax.