Vanguard drops medical benefits for retirees

[ivinsfan]

If it is disclosed up front you don't have to take a job that doesn't have the benefits you want. A retiree can't feasibly go back to work to get insurance. (Well okay some can but not all).

I was mostly wanting to make the point that those of you blessed with an ACA plan that doesn't suck are luckier than you may realize.

I certainly have no perfect answers, but if it was this ACA that was my only option I would probably move to another state. I really do believe it is THAT BAD.

I also ONLY still work for retiree health. 1.5 more years to qualify.

And I really hope that you can take advantage of that benefit but I'm sure deep down you know qualifying and actually getting the benefit isn't a sure thing.



I'm sure announcements like the one from VG cause you anxiety.

 

[badatmath]

And I really hope that you can take advantage of that benefit but I'm sure deep down you know qualifying and actually getting the benefit isn't a sure thing.

I'm sure announcements like the one from VG cause you anxiety.

Of course. And no of course I don't want new hires to get crappy healthcare or none, but I would not have cared so much at 22 either as I was thinking I was invincible. Haha. And at 22 health insurance hardly cost anything.

 

[Markola]

One has to wonder if some of the actual purpose of ACA was to shift HC expenses away from big companies onto the shoulders of the taxpayers and the little guys.

No, the purpose was to provide private market health insurance that met basic quality criteria to tens of millions of working Americans (“little guys”) who do not work for big companies, earn too much for Medicaid, and yet could not buy quality insurance on their own until they could get to age 65 and obtain government insurance.

 

[CaptTom]

A spokeswoman for Vanguard added this statement: “After a careful analysis of program limitations, utilization rates, and market trends, Vanguard made the decision to close out this program in favor of more effective opportunities to support crew, now and in the future.

I keep coming back to the above statement. This is exactly the sort of language my MegaCorp always used when they were screwing us out of some promised benefit. They were always doing it for us dear employees.

I know it's hard to overestimate the stupidity of the average citizen, but when it comes to taking money out of our pockets, most people notice. And the folks I w*rked with had developed a pretty good BS detecting sense after years of this sort of thing. It's hard to believe management actually thought employees and retirees would buy that line.

 

[ivinsfan]

No, the purpose was to provide private market health insurance that met basic quality criteria to tens of millions of working Americans (“little guys”) who do not work for big companies, earn too much for Medicaid, and yet could not buy quality insurance on their own until they could get to age 65 and obtain government insurance.

Didn't catch the cynical part ,huh. Certainly VG will point to the available outside HI as justification for slashing retirement HI benefits

 

[Midpack]

MegaCorp froze our pensions in 1994, and eliminated all retiree healthcare benefits for anyone not already retired shortly thereafter. Chart below shows only about 1 in 4 large companies were still offering retiree healthcare. Small companies are even less likely to offer retiree healthcare benefits. OTOH benefits are still more likely the public sector. Buying healthcare before we reached 65 was painful, at least out coverage is more reasonable now that we both have Medicare, Plan G supplements and Part D.

https://www.kff.org/report-section/ehbs-2020-section-11-retiree-health-benefits/

 

[youbet]

So far my MC is mostly trying to do away with things for new hires, which seems fair.

Veteran employees are going to have to learn to be very comfortable with new hires receiving higher cash offers (inflation adjusted) than they did. The vets total compensation might include pension, retiree health care, etc., while these things have been eliminated for the new hire. So you might see someone with a couple of years on the job receiving a higher cash salary than the vet whose compensation package includes non-cash benefits.

I suspect this will drive senior employees nuts. But, so be it........

 

[badatmath]

Veteran employees are going to have to learn to be very comfortable with new hires receiving higher cash offers (inflation adjusted) than they did. The vets total compensation might include pension, retiree health care, etc., while these things have been eliminated for the new hire. So you might see someone with a couple of years on the job receiving a higher cash salary than the vet whose compensation package includes non-cash benefits.

I suspect this will drive senior employees nuts. But, so be it........

Yep definitely happening. Doesn't bother me though. I have pretty well had enough of this place and it would not take a lot to get me out sooner. Too many unwanted job assignments as I survived layoffs.

 

[youbet]

No, the purpose was to provide private market health insurance that met basic quality criteria to tens of millions of working Americans (“little guys”) who do not work for big companies, earn too much for Medicaid, and yet could not buy quality insurance on their own until they could get to age 65 and obtain government insurance.

Is that true? I didn't think you had to be working to buy an ACA policy.

 

[RobbieB]

Nah, anyone can buy an ACA.

 

[Major Tom]

I have always wondered why in the U.S. health insurance is tied to your job. Really makes no sense. I was always self employed so I had to get health insurance any way I could. The ACA really helped me.

I am of the understanding that it all started during WW2. The Stabilization Act of 1942 was an attempt to battle inflation, by putting strict limits on wage increases. As a result of this, companies could no longer compete for employees by offering higher wages, so they had to look around for other enticements. "We have better health benefits than the competition!" became the rallying cry. I imagine that by the time wage controls were lifted, employer-sponsored health insurance had become an expectation, and an established way for companies to attract new employees. Universal healthcare was proposed under FDR and later, Truman, but was not adopted. This could only have served to help the continued practice of employers offering health insurance.

 

[Winemaker]

Big whoop. Megacorp stopped pensions for new hires 15 years ago at least. Megacorp sold our division off to another organization that had no retirement benefits for retirees, and soon afterward, Megacorp stopped paying retiree medical benefits for all retirees. Retirees sued and lost. Life goes on; it's a tough world out there.

 

[Markola]

Is that true? I didn't think you had to be working to buy an ACA policy.

Anyone can buy an ACA policy. I should have said that helping such working people was “one of” the many purposes of the law. Another was eliminating pre-existing conditions restrictions and lifetime caps. Etc., etc. It was a large and wide-ranging reform.

 

[Beststash]

The same thing happened to DW and I years ago. They dropped healthcare insurance for pre-65 workers and retirees. This was before ACA and it cost us 20K more a year for several years. We got ACA the year before we both turned 65. The union workforce and union retirees kept their healthcare because it was contractual.

Aggravating because I took a Mgmt job simply to increase my pension. As stated earlier Corps are not under any obligation to provide healthcare unless it is a contractual obligation. I planned on this when I retired early (52) - don't "F" with my plans!

After this experience, I checked to see if same Corp dropped Medicare post-retiree benefits could you get a Medicare Supplement with guaranteed underwriting. The answer was yes - much like your original decision when you have a one-time opportunity for guaranteed coverage.

 

[travelover]

........ That is why I never count on anything from MC in retirement. ...........

One thing you can count on is that pensions and other post retirement benefits will NOT be cut for CEO and other top management. #jackwelch

 

[rodi]

Veteran employees are going to have to learn to be very comfortable with new hires receiving higher cash offers (inflation adjusted) than they did. The vets total compensation might include pension, retiree health care, etc., while these things have been eliminated for the new hire. So you might see someone with a couple of years on the job receiving a higher cash salary than the vet whose compensation package includes non-cash benefits.

I suspect this will drive senior employees nuts. But, so be it........

Yes and no. My former MC was big on moving compensation OUT of salary and into other parts of the package . That's because bonuses, etc were based on Salary... HR liked to say the total compensation was the number to look at - but smaller annual bonuses (which were applied through a formula) were tied directly to salary.

 

[Chuckanut]

Never had medical retirement benefits other than the ability pre-Medicare age to buy into a very good state health insurance plan at the same rate as all other employees. I paid 100% of the premiums. Given my age it was a deal compared to plans I could buy on my own (No ACA at that time). I guess one can argue I was subsidized by the younger folks still working. Of course, when I was a young working guy, I was subsidizing a group of older folks. So, I don't feel bad about moving from subsidizer to the subsidized.

 

[rodi]

I missed qualifying for retiree medical by a hair. When they discontinued retiree healthcare going forward you had to have met the rule of 75 - age + years of service. I only had 72 when the cutoff date hit... The way my birthday fell, I was just over another year of service (and aging) to qualify. Oh well. My mega corp's retiree health was a being able to buy the self-insurance medical coverage at the full price (vs HMO's that were offered as an alternative). It was a good deal. But I'm glad the ACA came along and it was less of an issue. I didn't pull the plug for retirement till the ACA was in place. (Pre existing conditions is a big factor for my family.)

 

[RetiredAt55.5]

You mean this has happened before and there was no screaming on social media or roasting online. Judging from all the noise yesterday I though it was the first time in recorded history.

Well, it might be the first time in recorded history a major financial investment company that has doubled its assets under management from 4 trillion to 8 trillion in just the last 5 years (in the middle of a pandemic no less), has felt the need to slash retirement benefits to current retirees.

Their whole existence is predicated on being a responsible fiduciary of money and wise money management. So, why the major cuts at this time?

I guess they don't have "enough".

 

[travelover]

.......Their whole existence is predicated on being a responsible fiduciary of money and wise money management.........

Exactly. If there is one thing I look for in a money manager it is good judgment. This latest action showed extremely poor judgment by their management. What else are they screwing up that will end up costing me?

 

[RetiredAt55.5]

update

On Friday, Vanguard issued an apology to current and retired employees, and promised to change their original plan that had been announced just 4 days prior -

https://www.inquirer.com/business/vanguard-ceo-mortimer-tim-buckley-rma-retiree-medical-account-employees-20211009.html

A subsequent email sent out on Sunday from HR said they will grandfather current retirees in the program. They said they will need time to decide how to handle current employees that would be eligible once they retire.

Quite a week of developments!

 

[Markola]

^^^^^ I was looking for the part where Buckley said they’d fired the head of Human Resources, the one who signed the original disastrous message. My spidey sense reads all kinds of typically toxic HR power trips and poor communication in that one. I’ve seen too much from that ilk.

 

[ivinsfan]

On Friday, Vanguard issued an apology to current and retired employees, and promised to change their original plan that had been announced just 4 days prior -

https://www.inquirer.com/business/v...tiree-medical-account-employees-20211009.html

A subsequent email sent out on Sunday from HR said they will grandfather current retirees in the program. They said they will need time to decide how to handle current employees that would be eligible once they retire.

Quite a week of developments!

You have to figure current retirees in general have already used a pretty large amount of their account money...if your under 65 and married you could had used close to 15-20 grand a year.



Now the person planning to retire in next 2 to 3 is gonna have a problem...

 

[OldShooter]

Well, it might be the first time in recorded history a major financial investment company that has doubled its assets under management from 4 trillion to 8 trillion in just the last 5 years (in the middle of a pandemic no less), has felt the need to slash retirement benefits to current retirees.

Their whole existence is predicated on being a responsible fiduciary of money and wise money management. So, why the major cuts at this time?

I guess they don't have "enough".

Maybe its because they eliminated trading fees and reduced fund expense ratios, including totally eliminating "Investor" class shares in favor of lower-fee "Admiral" shares. I don't know their numbers but the recent fee wars probably impact the P&L significantly. How can that not be? The wars basically killed TDAmeritrade. I have been saying for some time that we have not seen the end of the fee wars story. Each of the major houses is scrambling internally to fix up a damaged P&L, doing it sometimes in different ways.

 

[Go-NoGo]

^^^^^ I was looking for the part where Buckley said they’d fired the head of Human Resources, the one who signed the original disastrous message. My spidey sense reads all kinds of typically toxic HR power trips and poor communication in that one. I’ve seen too much from that ilk.

I have no love lost for HR. Very early in my career I was naïve and thought HR was neutral and open to issues that rank and file had. That was dispelled very quickly, a more senior employee counseled me - HR is not your friend. Be very very careful approaching them. So true.

In this matter, I find it hard to believe that HR did not have the complete approval of the CEO before setting the policy and sending out that memo.

Social media and newspapers helped getting the outrage out and the change backfired badly on Vanguard. They had to do damage control - and hence the mea culpa. Will be interesting to see how this plays out and if other companies are emboldened (or not) to try and do the same.