IBM To Drop Retiree Health Care Plan, Subsidize Options Reviewed by Momizat on . ARMONK, N.Y. – IBM has announced that it will close down its current health care plan for retired workers and subsidize health care for Medicare-eligible retire ARMONK, N.Y. – IBM has announced that it will close down its current health care plan for retired workers and subsidize health care for Medicare-eligible retire Rating: 0
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IBM To Drop Retiree Health Care Plan, Subsidize Options

IBM To Drop Retiree Health Care Plan, Subsidize Options

ARMONK, N.Y. – IBM has announced that it will close down its current health care plan for retired workers and subsidize health care for Medicare-eligible retirees.

The announcement was made in a notice to retirees, reviewed by The Wall Street Journal and confirmed by IBM. The plan was also confirmed by a YouTube video posted by IBM that explains the new plan.

In the video, Dr. Kyu Rhee, IBM’s chief health director, says that the current IBM health care model is “no longer sustainable for [employees] or the company” and that health care costs “will triple in the next few years largely impacting premiums and out-of-pocket costs.”

IBM’s new plan will affect 110,000 Medicare-eligible retirees, according to The Wall Street Journal report.

Instead of offering the company-sponsored insurance plan, IBM said that it would give money to retirees to use to purchase insurance if they enroll in the Extend Health Medical Exchange, a privately run Medicare insurance exchange. In the video, Dr. Rhee said that hundreds of other companies have made similar changes and that under the new plan, retirees will be able to take advantage of programs “that are of equal or better value than what IBM can currently offer.”

The current retiree insurance option will end Dec. 31.

A statement issued by IBM said that “studies show that the majority of people who are presented the concept of an exchange are skeptical at first, but once they understand the options available to them through these exchanges, they have a more positive outlook.”

IBM also said in the statement that the new arrangement puts the retirees in a bigger pool of beneficiaries, spreading risk and lowering cost.

The company has been holding meetings with retirees to answer questions about the transition. It said in a statement that a meeting in San Jose, Calif. on Sept. 4 drew 1,300 retirees. It plans to hold a meeting in the Hudson Valley region but details have yet to be announced.

The company has made other moves recently to lessen its costs for current employees. In the second quarter, IBM spent $1 billion to restructure its workforce, cutting more than 3,300 employees in the U.S. and Canada, according to Alliance@IBM, an employee group. It also required U.S. hardware division employees to take a week off with one-third of the pay.

IBM doesn’t disclose the number of employees by country or by division. The company’s total workforce was 434,246 as of Dec. 31. IBM has facilities in Somers, Yorktown Heights, Hawthorne, Armonk, Poughkeepsie and East Fishkill.

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About The Author

Dutchess editor

Award-winning journalist Bob Dumas’ writing and editing career spans more than 25 years. He is the recipient of the prestigious Maggie Award for outstanding magazine writing, and has won several New York State Press Association honors for his work in community-based journalism. He was named “Who’s Who in Aquatics” by Aquatics International magazine for his for exposes on safety in the swimming pool industry. He has written for national trade magazines for one of the largest business-to-business publishers in the U.S., and was the deputy editor for North County News in Yorktown. He graduated from the State University of New York at Oswego with a BA in Communication.

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Comments (9)

  • Fred Kempf

    As an IBM retiree, I have not received any notice of IBM’s plans for Retiree Group Medicare HMO’s, or health care. I never received a reply from an email submitted to Dr. Rjee I submited last year regarding IBM’s Medical Plans. IBM is not interested in getting information out to its retirees, and we have to hear it first hand on the Internet News!!

    Reply
  • Sam DiAntonio Jr.

    Does this affect all retirees or employees getting ready to retire?

    Reply
  • Gary Huber

    The Extend Health company does offer help and enrollment people. They also told me that pre-existing conditions do not apply THIS year for the first time you enroll. And if you stay with the same provider and plan pre-existing conditions will not effect next year, but if you change plans or providers you will be subject to a pre-existing condition interview and may not be offered insurance. How do you like that? Is this what IBM wants to do to it’s retirees? If we are not subject to pre-existing conditions this year why was this not put in the contract for future years just like it was when IBM was offering the insurance.

    Reply

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