IBM retirees will be taken off the company’s health plan starting January 1, 2014.
IBM announced this week that it would be giving its former employees money to buy coverage on a health-insurance exchange.
The company says that some IBM retirees may be skeptical about the change but added that the health insurance exchange, Extend Health, will offer retirees additional benefits and may cost less than their current plan.
IBM said that they decided to make the change because the cost of providing care for Medicare-eligible retirees will triple by 2020. The company said that much of the additional money would be paid out-of-pocket by the retirees.
A spokesman said: “IBM didn’t make this change to save money – it does not reduce our costs.”
The change will effect about 110,000 former employees who are now eligible for Medicare.
The Huffington Post reports that under the new plan IBM will make contributions annually to health-retirement accounts. IBM retirees will be able to use that money in order to by Medicare Advantage or other supplement coverage.
IBM said in a statement: “This transition provides more choice and flexibility at equal or better costs to our retirees… While some retirees may be skeptical today, 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.”
The company has scheduled meetings with IBM retirees around the country to explain the changes. More than 1,000 former employees met in San Jose, California this week. The company will meet with more former employees next week in Austin, Texas.