Wednesday, October 03, 2012

Retiree Plans Go Poof!

Retiree plans are dropping like flies. Johns Manville, American Airlines, 3M and Kodak are just a few corporations that have either discontinued retiree plans or have plans to do so.                    
Did you know there are sites on the internet that show CEO's how to maximize profits by terminating retiree plans?
Large employers continue to drop retiree health care plans – just 24 percent offered coverage to retirees under 65 and 16 percent to Medicare eligible retirees, compared to 29 percent and 21 percent the year before.

What is causing this movement?

Much of the blame lies with Obamacare.

The increased direct costs that impact health insurance premiums plus additional oversight and compliance mandates are already causing many employers to consider dropping health insurance. Employees under age 65 will be able to purchase health insurance (possibly with a subsidy) through an exchange.

Retirees over the age of 65 can return to original Medicare and enjoy a GUARANTEED RIGHT to purchase a Medigap plan. 

When employers terminate retiree plans you may actually be better off than before. With original Medicare you can use any doctor, any hospital and never have to worry about networks, referrals or claim forms.

Many employers are subsidizing the cost of your Medigap coverage which means you may actually pay less than you did for the retiree plans and have more coverage.
Former employees of Johns Manville got this letter back in July that announced the cost cutting move cancelling retiree plans.
Johns Manville is moving from the current group health plan to providing a subsidy that you and your eligible spouse can use to enroll in any individual plans that supplement your original Medicare (Parts A and B) coverage, including Medicare Supplement, Medicare Advantage and Medicare Part D (prescription drug coverage), as well as for reimbursement of Medicare B premiums.
No longer will the cost of your insurance be deducted from your pension check or paid separately.
Rather, Johns Manville will provide a tax-free subsidy that will be available to you January first of each year through a ‘Health Reimbursement Arrangement’
Sounds like a workable plan to me. You have the freedom to choose any plan, including those that allow you to see any doctor. The cost of your health insurance plan will be subsidized through a "voucher" type system by way of an HRA.

As retiree plans become a thing of the past seniors age 65 and older will enjoy more flexibility.
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