What to Do If GM Cut Your Health Insurance - TheStreet

What to Do If GM Cut Your Health Insurance

The auto giant is changing the rules for former workers, and here are some ways to navigate the new system.
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General Motors' (GM) - Get Report salaried retirees were caught by surprise last week with the announcement of the withdrawal of health care from 2009, and the initial anger is still there, but now it's being replaced by concerns about the future.

Here's an outline of what GM retirees can expect, and what steps to take to get health insurance if this has happened to you.

What Has Changed

Effective Jan. 1, eligible GM salaried retirees and their spouses will no longer receive health care benefits once they reach 65 and become eligible for Medicare. Instead they will receive a taxable increase to their pension of $300 per month. Eligible retirees are those who currently do or would have received GM health care assistance after age 65.

Both retiree and spouse will continue to receive GM health care until they individually reach 65.

The $300 increase to the pension is a discretionary increase and is subject to GM's continuation of this benefit, which means that it could be reduced, removed or increased in the future.

GM has contracted with

Extend Health

to provide health insurance advice and coordinate enrollment, and has asked individual health insurers not to contact retirees directly.

GM Plan Isn't So Bad, Comparatively

Both

Ford

(F) - Get Report

and

Chrysler

have been through this process over the past two years, and GM retirees may actually consider themselves somewhat fortunate after looking at the options offered by the other companies.

Chuck White, chairman of a group of Ford retiree organizations, says, "We get $1,800 each year into a Health Reimbursement Account, plus the same for a spouse/domestic partner. The average retiree would prefer the GM plan, no medical expenses to be reimbursed, spend it however you want. It is twice as much, even if it is taxable."

Enrollment Concerns

It would be fair to say that we have received much feedback from both Chrysler and Ford retirees about their experiences with EH. White says, "Extend Health did some good things and improved as they found problems. If a retiree calls, he will have one benefits adviser throughout the process."

Chuck Austin, president of the

National Chrysler Retirement Organization

, says he's heard anecdotal evidence that EH was "simply overwhelmed with calls."

Bryce Williams, president and CEO of Extend Health, says things have improved: "Extend Health is providing a better and more efficient enrollment process with most of the health care providers. ... We will have hundreds more agents on the phone and every time you call you will speak with a licensed benefits adviser."

Williams adds that they have increased technology usage with health care providers and that these two steps should take care of 90% of the previous problems.

EH has arrangements with most Blue Cross Blue Shield companies, including BCBS of Michigan, and offers the plans that BCBS-MI has on the market.

Health and Coverage Concerns

With the exception of end-stage renal failure patients, who should contact them, EH says all other retirees will be able to obtain access to a Medigap or Medicare Advantage guaranteed-issue plan within the Medicare enrollment period. Those undergoing cancer treatment or suffering from chronic conditions, such as diabetes, will be able to obtain coverage.

Austin of the Chrysler retirees group says, "There is a Medicare Advantage plan with Blue Cross offering comparable care to the old Chrysler plan in Michigan. When Chrysler withdrew the plan, most people transferred and were not refused coverage. Prescription plans varied and some people found that they were not covered for the drugs they previously had."

Other Concerns

EH says it will work with spouses who lose coverage, as well as the retirees themselves.

Some retiree-rights advocates have voiced concern about confusion and difficulty, given the magnitude of the changes, as well as the fact that some of those affected might require assistance in sorting through the options and making the decisions.

Jack Dickinson of GM retiree group

Over the Hill Car People

says, "This is overwhelming to retirees in their 70's and 80's. Help lines like Extend Health are meant to be a help but it is overwhelming to elderly people who don't expect to have to make these kind of decisions."

Regarding those who may be infirm or need help with the choices, EH's Williams says "a caregiver or relative can be on the call to us, as well to assist getting them on the right plan. There are legal documents that can give caregivers or relatives proxy to help enroll the infirm."

As for the cost, Williams says, "We cannot predict what will happen, but most clients are very surprised at the competitive value of the individual plans available in the market."

NCRO's Austin says, "Finding our own coverage is more expensive -- everyone is paying more than before." He says costs have risen between $2,000 and $10,000 a year.

White of the Ford group comments, "Some retirees in good health found that they could get a pretty good plan at a lesser cost ... but with high prescription plan requirements, costs rose. Everyone is different."

Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.