This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IBM Moving Some Retirees Off Its Health Plan

By David Koenig

IBM (IBM - Get Report) plans to move many retired workers off its health plan and give them money to buy coverage on a health-insurance exchange. The move is part of a corporate trend away from providing traditional retiree health benefits as costs rise.

The company says it acted after projections showed that costs under its current plan for Medicare-eligible retirees will triple by 2020 and that the increases would be paid by retirees through premiums and out-of-pocket costs.

An IBM spokesman said Saturday that the change will affect about 110,000 retirees who are eligible for Medicare.

Under the change, IBM will make annual contributions to health-retirement accounts. Retirees would use the money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange.

The change affects medical, prescription drug, dental and vision coverage.

The company is meeting with retirees around the country to explain the change. About 1,300 retirees attended the first one this week in San Jose, Calif. The next is planned for Monday in Austin, Texas.

IBM acknowledged that "some retirees may be skeptical" about the changes. But it said the health exchange, Extend Health, will offer benefits not now available under IBM's group plans and possibly at lower cost to retirees.

Spokesman Douglas Shelton said IBM capped health subsidies to retirees in the 1990s, and so higher costs would mostly lead to higher premiums and out-of-pocket costs for retirees.

Other large employers are also moving away from retiree health benefits. American Airlines' parent AMR Corp. (AAMRQ), for example, is seeking approval for the change from a federal bankruptcy court judge.

A Kaiser Family Foundation report issued last month found that among companies with at least 200 workers, 28 percent that provide health benefits also offer retiree coverage.

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 percent of companies with at least 5,000 workers are considering it.

The authors said there could be "a significant change in the way that employers approach health benefits and the way employees get coverage, with employers playing a less active role."
Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
IBM $151.14 0.00%
AAPL $111.60 0.00%
FB $94.26 0.00%
GOOG $646.67 0.00%
TSLA $215.58 0.00%


Chart of I:DJI
DOW 17,131.86 +47.37 0.28%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,838.6430 +8.1730 0.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs