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Megacorp Reneges on Retiree Health Care
Old 11-30-2018, 06:31 PM   #1
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Megacorp Reneges on Retiree Health Care

I just got a letter today from my Megacorp. They gave notice that effective January 1, 2021, they are terminating their Medicare Supplement Plan for all retirees. They have been paying a maximum of $2100 each per year for the retiree and his/her spouse for Medigap and Part D plans. I guess I always knew that they could do this if they wanted, but I thought they were a quality company who wouldnít do that to its retirees. I guess I was wrong about that.

It will be a $4200 annual hit to my budget once DW turns 65 in two years (Iíve been on Medicare for one year now). I canít tell you how bummed I am.

Iím really glad now that I elected to take my pension as a lump sum rather than an annuity. You really canít count on a corporation to uphold its promises to you.
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Old 11-30-2018, 06:36 PM   #2
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You'd be surprised to see how fiscally unsound many large companies really are. And many fight cash flow daily. Many CEO's just about have a heart attack every year when their employee benefit packages are renegotiated, and this may be the year the Camel's Back has been broken. And it's employee benefits where they often cannot find the cash to pay into the old defined pensions.

My MegaCorp allows me to purchase their retiree healthcare--not given anything. But I'm just glad our pensions are extremely well funded.
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Old 11-30-2018, 06:37 PM   #3
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Anyone reading this who has made a budget based on employer provided health care should realize padding is needed for exactly this situation...


I'm not clear from your post if they dumped all retiree health insurance of just the Medicare supplement portion of it.
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Old 11-30-2018, 06:48 PM   #4
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I'm not clear from your post if they dumped all retiree health insurance of just the Medicare supplement portion of it.

They are apparently maintaining the pre-65 retiree health care insurance. Thank goodness . . . . my wife has two more years on that. But, once youíre on Medicare, youíre on your own.
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Old 11-30-2018, 06:48 PM   #5
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Sorry about your surprise. And good to hear that you are financially able to take the hit. Cancelling retiree benefits after they have already been started is not a new thing. The exact same thing happened to my DF some 20 years ago in the middle of his retirement from a VERY quality company. His experience taught me to not rely on Corporate policy/promises. Those can be changed at any time, in any business climate. I took my lump sum too when I had the chance. There is nothing more liberating than being in control of your own destiny, for good or for bad.
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Old 11-30-2018, 07:02 PM   #6
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Iím really glad now that I elected to take my pension as a lump sum rather than an annuity. You really canít count on a corporation to uphold its promises to you.
I would hope that a pension would be guaranteed by the PBGC. Not a full 100% guarantee but better protection.

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Anyone reading this who has made a budget based on employer provided health care should realize padding is needed for exactly this situation...
I am in that boat. Padding is an understatement. In preparing to retire, I did not give any value to my retiree healthcare. I figure any that I do get is gravy. That and the cut to SS are my two biggest risks. Inflation and a market collapse would be worse in gross dollar terms but the later two seem more likely.
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Old 11-30-2018, 07:02 PM   #7
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Thus happened to my brother- the company is a Berkshire sub and they provided 100% pre-Medicare coverage for retirees. Until they didn't. They got a letter in late 2017 saying they were on their own starting 1/1/18. Fortunately, DB and DSIL were very LBYM types and paid cash for their house, but they ended up paying $22K/year total for an ACA policy. They've still got a couple of years till Medicare.

A previous employer of mine (didn't retire from there) cut back this benefit by freezing it at the then-current level they were paying- so you at least got a partial subsidy, which paid a smaller % of your ACA coverage as your premiums increased, but it was less of a shock.
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Old 11-30-2018, 07:20 PM   #8
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In the last two years, my very successful, double-digit growing mega has...frozen our pension, eliminated medicare supplement coverage and eliminated pre-medicare retiree medical unless you were already eligible for it (combo of age+service of 65-I missed that one by 4 months). Oh, and my salary was frozen because Iíve been there so long, Iím ďmaxed outĒ.

The eye-opener was that they didnít even inform all employees about the pre-medicare and medicare supplements going away. They only sent notification to those eligible or already on the plans. Sleazy cowards. Three people emailed it to me asking what does this mean (about the pre-medicare one) and I replied that apparently I just got scr**wed and they got by just under the wire.

So I agree-donít count on anything. Even companies doing great still want to cut costs and they donít look bad doing it when their competitionís doing the same thing and it makes the stock price or partner shares go up.

I do take GREAT comfort in patting myself on the back for starting to save for retirement 25 years ago. Alot of my colleagues are fed up but feel locked in because they havenít been saving much. At least I only have a few more years till I can run out the door.
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Old 11-30-2018, 07:27 PM   #9
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I was incredibly relieved when I got the letter from Megacorp last month telling me my retiree medical premiums were going up ~17%. Not great, but at least I have coverage through the end of 2019. I'll go through the same angst each fall until 2022 when I'm eligible for Medicare.


They took away post-65 coverage several years ago when they also stopped offering retiree medical to anyone who didn't already have 10 years of service. I'm hoping those cuts will keep the coverage available to us long-tenured folks. I feel very fortunate to have it.


I know this is bad news for you txtig, but at least they gave you some notice instead of <30 days or so. Best of luck to you. It's scary for everyone in these situations. I hate being at the mercy of someone else's promised generosity.
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Old 11-30-2018, 07:34 PM   #10
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Although the last agency I worked for did not have a really good pension compared to the one I worked for many years ago, the Medicare benefits are very good. We receive a monthly allowance through an HRA of $213, which can be used to pay the Medicare supplement, Part D premiums, and co-pays for drugs and other medical expenses. There are funds set aside to reimburse the lowest level Part B premiums and that will continue until the funds are exhausted. No date estimate, but not likely to happen soon. All of this is through the pension system, not the employer, who kicked the pre-Medicare retirees off the agency's health coverage, leaving the pension system to pick up the pieces.
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Old 11-30-2018, 07:43 PM   #11
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Originally Posted by txtig View Post
I just got a letter today from my Megacorp. They gave notice that effective January 1, 2021, they are terminating their Medicare Supplement Plan for all retirees. They have been paying a maximum of $2100 each per year for the retiree and his/her spouse for Medigap and Part D plans. I guess I always knew that they could do this if they wanted, but I thought they were a quality company who wouldn’t do that to its retirees. I guess I was wrong about that.

It will be a $4200 annual hit to my budget once DW turns 65 in two years (I’ve been on Medicare for one year now). I can’t tell you how bummed I am.

I’m really glad now that I elected to take my pension as a lump sum rather than an annuity. You really can’t count on a corporation to uphold its promises to you.
So, did you sign up for a Medigap plan through your employer, or on your own and the company reimbursed you. Just wondered if this meant you had to get a new Medigap plan.
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Megacorp Reneges on Retiree Health Care
Old 11-30-2018, 07:58 PM   #12
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Megacorp Reneges on Retiree Health Care

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So, did you sign up for a Medigap plan through your employer, or on your own and the company reimbursed you. Just wondered if this meant you had to get a new Medigap plan.

Thankfully, itís not through the company. They used Via Benefits (currently being discussed in another thread) to reimburse the retiree for plans bought on the open market.
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Old 11-30-2018, 08:04 PM   #13
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Thankfully, itís not through the company. They used Via Benefits (currently being discussed in another thread) to reimburse the retiree for plans bought on the open market.
Were you restricted in which plans you could choose by going thru Via Benefits?
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Old 11-30-2018, 08:04 PM   #14
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In my pre-retirement planning, I went to a web site where I was able to input values to come up with an estimate for ACA costs. I plugged that number into my budget, on the assumption that MegaCorp will at some point pull the same stunt.

Hasn't happened to me yet, but they did do that thing where they froze the retiree health benefit at the dollar amount they were spending a few years ago, so the cost born by the retiree goes up every year.

When talking to stockholders, MegaCorp brags about how they're making so much money they hardly know what to do with it all. When talking to employees and retirees, they've just suffered their worst year ever, and don't know HOW they will be able to keep paying for raises, bonuses or benefits.
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Old 11-30-2018, 08:31 PM   #15
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Megacorp Reneges on Retiree Health Care

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Originally Posted by txtig View Post
... I guess I always knew that they could do this if they wanted, ....

You really canít count on a corporation to uphold its promises to you.
I don't think you can really say they "reneged", it was never a contractual obligation.

Sure it sucks, I know. But as you say it's a "promise". Promises can be broken. If you want something stronger, you need a contract.


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I would hope that a pension would be guaranteed by the PBGC. ... .
You don't have to hope. Private pensions are guaranteed by PBGC, up to a cap ( ~ $50K or something now, IIRC).

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Old 11-30-2018, 08:38 PM   #16
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Promises made this year by Megacorps may not be kept next year. In my past company, I watched 90% of accrued paid time illness be taken away one year, with the other 10% essentially inaccessible (unless you had a catastrauphic injury or illness). The monthly 401(k) match became annual in December, then in January, and then in March of the year following, assuming you were an employee on December 31 of the previous year. My assumption is that private and public pensions as well as promised medical insurance are not necessarily safe.
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Old 11-30-2018, 08:41 PM   #17
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DH's Megacorp has pared back benefits over the about 8 years he has been retired. The main changes were early on when the premium costs skyrocketed. Then Megacorp changed to an HRA structure where the HRA grows at a low rate each year while premiums increased a bunch on the retiree health plan that was a good PPO. A few years ago Megacorp started using One Exchange (Via Benefits) and you could use the HRA to get a marketplace or off market plan or could keep the good PPO. I kept that PPO. I have been nervous all along that they would end retiree benefits but it hasn't happened (although it has become more expensive) and I go on Medicare in a few months (I don't think newer employees get the same benefits).

DH after he went on Medicare gets his Part D paid for by Megacorp. I will be getting an HRA that I can use for supplement or Part D or Part B premiums. It a little over $2k so it is a nice to have but we could make it if it went away.
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Old 12-01-2018, 05:18 AM   #18
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I just got a letter today from my Megacorp. They gave notice that effective January 1, 2021, they are terminating their Medicare Supplement Plan for all retirees. They have been paying a maximum of $2100 each per year for the retiree and his/her spouse for Medigap and Part D plans. I guess I always knew that they could do this if they wanted, but I thought they were a quality company who wouldnít do that to its retirees. I guess I was wrong about that.

It will be a $4200 annual hit to my budget once DW turns 65 in two years (Iíve been on Medicare for one year now). I canít tell you how bummed I am.

Iím really glad now that I elected to take my pension as a lump sum rather than an annuity. You really canít count on a corporation to uphold its promises to you.
Thats too bad. Hopefully you have enough slack in your budget to pick up the extra cost without sacrificing standard of living.
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Old 12-01-2018, 06:06 AM   #19
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For budgeting purposes I use the ACA numbers (un-subsidized) but I do sympathize with OP. It's a bummer when Plan A has to be dropped for Plan B.

Actually I had no idea some MegaCorps gave (healthcare insurance) money after 65; I'll have to look into it when I reach 65.
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Old 12-01-2018, 06:20 AM   #20
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Sorry to hear that. The Fortune 500 mega I worked for froze pensions and ended retiree health care in 1994. In retrospect they did me a favor. Beginning then, I never planned on ANY company retiree benefits and fortunately I was young enough and just reaching peak earning years so we could plan to be financially ‘self sufficient’ in retirement. I never planned on Soc Sec or Medicare either, though I’m sure we’ll have some benefit from both, albeit reduced along the way.

Everyone should have a plan A and a plan B, C, D in advance and during retirement IMO, nothing is guaranteed, especially for 20-40 years like many retirement plans.

I’d be surprised if any of us had exactly the 30-40 year career they’d planned, I sure didn’t. So why would anyone think their 30-40 year retirement wouldn’t have any uncertainties?
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