IBM Retirees: More Than 100,000 Retirees Taken Off Company Health Insurance Plan, Due To Costs For Medicare-Eligible Retirees; Prices Will Triple By 2020?

About 110,000 IBM retirees will be moved off the International Business Machines Corp. company-sponsored health plan. Instead, IBM retirees will receive a payment to buy coverage on a health-insurance exchange, in order to cut costs as medical prices continue to rise, Fox News reports.

The move will affect all IBM retirees once they become eligible for Medicare, the website reports. IBM told retirees that its current retiree health plan coverage will end for Medicare-eligible retirees after Dec. 31, 2013, according to documents reviewed by The Wall Street Journal and confirmed by IBM, Fox News reports.

"Cost increases under our current retirement group health care plan are no longer sustainable for you," IBM said in the notices. "Health care costs under IBM's current plan options for Medicare eligible retirees will nearly triple by 2020, significantly impacting your premium and out of pocket costs," the notice said.

According to Fox News, IBM said the growing cost of care makes its current plan unsustainable without big premium increases.

Instead, IBM will make annual contributions to health-retirement accounts, USA Today reports. Retirees can use the money to buy Medicare Advantage or supplemental policies through a private Medicare exchange.

The change affects medical, prescription drug, dental and vision coverage, according to USA Today.

IBM acknowledged that "some retirees may be skeptical" about the changes.

However, the technology company said the health exchange, Extend Health, will offer benefits not now available under IBM's group plans and possibly at lower cost to retirees.

A Kaiser Family Foundation report published last month found that among companies with at least 200 workers, 28% that provide health benefits also offer retiree coverage, USA Today reports.

The study's authors said few large employers have turned over benefits for workers or retirees to private exchanges like Extend Health. But they said 29% of companies with at least 5,000 workers are considering it. 

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